India is trying to pry open the UK market for ghee in exchange for bringing the latter’s blue cheese to the Indian market, under the proposed free trade pact being negotiated by the two countries, an official aware of the matter said.
India is trying to pry open the UK market for ghee in exchange for bringing the latter’s blue cheese to the Indian market, under the proposed free trade pact being negotiated by the two countries, an official aware of the matter said.
Trade negotiators have pressed the UK to waive its sanitary and phytosanitary (SPS) rules to let in ghee and other dairy products, which remain shut from the British market.
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Trade negotiators have pressed the UK to waive its sanitary and phytosanitary (SPS) rules to let in ghee and other dairy products, which remain shut from the British market.
This is because these food safety rules insist on traceability of goods—a hard task in India where large dairy co-operatives source their milk from millions of individual cattle farmers and small dairy farms.
“The demand is to get SPS waiver for Indian ghee, which will provide for its entry into the UK market. This is being sought since India is considering allowing cheese under the free trade agreement (FTA), which will provide a big market to their blue cheese,” the official cited above said on condition of anonymity.
Emails sent to a commerce ministry spokesperson and commerce secretary Sunil Barthwal on Friday were unanswered till press time.
Several European countries produce and export blue cheese, with added edible moulds for varying tastes, bearing noticeable blue or green spots or veins. Italy is the world’s largest exporter of blue cheese while Germany is the largest importer. Data from agencies that track the cheese market shows that global exports of blue cheese grew 12.8% between 2020 and 2021.
India levies a 150% import duty on blue cheese; plus, retailers add margins of up to 30% on imported cheese, keeping it out of reach of most regular buyers. While the UK sees a big market for its cheese here, India is equally keen to open up the British market for its ghee.
The move would give a boost to exports of Indian dairy companies, since India-made ghee is anyway being exported to various other markets like the US and Australia where there is a large Indian diaspora, as there is in the UK.
According to R.S. Sodhi, president, Indian Dairy Association, the branded ghee market in India is estimated at ₹50,000 crore, and exports (globally) would be just ₹1,500 crore.
That is puny compared to the overall ghee market in India, which was estimated to be ₹3.2 trillion in size in 2023, according to data from market research firm IMARC, a large part of which is in the unorganized space. The market is expected to grow to ₹6.9 trillion by 2032, at a compounded annual growth rate (CAGR) of 8.72% from 2024.
“Indian dairy brands already meet Codex standards (international food standards) when exporting to markets like the US and Australia. All large, famous Indian ghee brands are able to meet the world standards whether it’s the US or Middle-East or Australia or New Zealand. While the UK and Europe have restrictions due to the SPS rules, Indian ghee quality is pretty good. Overall, demand for ghee remains big among both among the large Indian population overseas as well as consumers who wish to try Indian products,” said Sodhi.
Analysts, however, say that an SPS waiver may be difficult, but noted that apart from its use as food, ghee is also used for religious purposes.
“Indian ghee has multiple purposes—both food and non-food,” said Arpita Mukherjee, professor at the Indian Council for Research on International Economic Relations.
“It is used as part of various religious practices by Hindus. There is a ban on export of milk products to the UK due to traceability issues, which may be discussed. For UK exports, there are no such issues, but tariffs are high. SPS waiver may be difficult but a process of joint evaluation, or firm-by-firm approval after they go through a due diligence process, is possible,” Mukherjee added.
While SPS approval may be difficult to come by, there is a precedent of a Russian agreement that proposed waiving SPS on a case-by-case basis, Mukherjee said.
