IMPACT OF PROPOSED EU-INDIA FTA ON TEA AND COFFEE: An assessment

Abstract

India is actively engaged in FTA negotiations with EU and it is expected to realize in the near future.Though sensitive products list is not known to the public, agriculture sector is also under active negations and EU is aiming for bringing 90 per cent of Indian agricultural products to zero level tariffs with possibly no special safeguard measures to protect from import surges and special and differential treatment that exempts developing countries from the same strict trade rules and disciplines of more industrialized countries (Sing and Sengupta 2009). The agricultural sector in generaland plantation sector in particular has been under protection for long time and plantation sector provides employment and livelihood for millions of people in India. It seems that opening up of the market to developed countries such as EU, will have larger impact on Indian plantation sector. In this respect the study makes an attempt to assess the impact of India-EU FTA on Tea and Coffee and explores long term advantages through deep integration. Assessment is based on present trends in tea and coffee export, import, export unit value, import unit value, tariff structure, composition and direction of tea and coffee trade of EU-27 and India. In terms of tea and coffee trade structure, India is mainly a low priced market for tea and coffee and imports low priced tea and coffee from the world. In such a scenario, the high valued tea and coffee from Europe may not compete with Indian tea and coffee market. However, in India, small and marginal farmers contribute major part of production in tea and coffee sector and such farmers are not well equipped to make value addition to their produced products, and cater the market for value added products. Though, this sector is potential for private investment especially value addition in supply chain, the private sector investment is not taking place in a big way. In this respect , India needs to explore the opportunities to attract EU multinational companies engaged in coffee manufacturing to invest in India and collaborate with Indian coffee manufacturing units, so that Indian value added plantation products such as Tea and Coffee can access the European and other developed countries market.