India seeks import duty relaxations for basmati rice in FTA with UK

The duty concession is being sought for basmati varieties that have been recognised by the UK in the last few years. Already, in some traditional basmati varieties, there are some duty relaxations.

However, with new varieties being added to the list of basmati rice, India is believed to be seeking some more reduction in duties.

“Tariff reduction for basmati rice is one of India’s key demands in the India-UK trade deal negotiation,” a person aware of the matter told Business Standard.
 

The UK, according to industry players, levies a tariff per tonne of around £56 (about Rs 5,880) on brown rice and £125 (about Rs 13,126) on white rice, which also includes basmati. Brown rice is usually unpolished rice.

According to some traders, India used to export around 450,000 tonnes of basmati rice to the European Union (of which the UK was a part till very recently). This has come down to around 200,000-225,000 tonnes per annum due to stiff competition from neighbouring Pakistan.

Pakistan is a major competitor for India in the UK rice market. In 2017, sources said it exported rice worth around $64 million to the UK, which rose to $104 million in 2021.

It is not clear how comfortable the UK will be to offer tariff concessions as negotiations towards the trade deal are yet to be concluded.

The 10th round of negotiations took place earlier this month, with the next round scheduled around end-June.

A section of traders and trade policy experts said that India should not only negotiate for duty concession for basmati rice. It should also ensure that other domestic non-basmati rice varieties get ready and easy access to the UK markets.

The problem of pesticide residue, which leads to hidden non-tariff barriers, should also be addressed, they felt. This is because rice is a commodity, which is prone to such distortions.

“The strategy of India-UK FTA on rice must focus on a broader category such as Aromatic and Specialty rice. The ponni or sona masuri rice or govind bhog markets are as significant as basmati rice. Currently, they (specialty non-basmati rice varieties) are close to 35 per cent of basmati rice export volumes to the UK. India should also negotiate tariff concessions and trade facilitation measures for Indian sweets, namkeen, papad and ready-to-eat. This could set a new trend and see exponential growth in the ‘Bharatiya Restaurant’ market in the UK,” said leading trade policy analyst and author of the book ‘Basmati Rice – The Natural History Geographical Indications ,’ S Chandrasekaran.

According to the progress of the proposed trade deal, shared by the department of commerce last week, out of 26 policy areas or chapters, 14 have been substantially closed for negotiations. And, significant progress has been made in other chapters.

FTA negotiations with the UK began in January 2022. Both sides aim to conclude the deal at the earliest. The UK is India’s 15th-largest trade partner, with total trade at $20.36 billion in FY23.