Agriculture critical to India-UK FTA talks

Abhishek Jha | August 6, 2020

• India has been one of the few countries whose primary exports during Covid phase experienced a proliferation which mainly includes cereals, animal and vegetable fats, sugar, fruits, vegetables, pharmaceuticals, processed oils and fats. This has been the litmus test for Indian exporters during the pandemic phase and they have very justified their robustness.
• Overall, India’s agriculture exports to UK in May 2020 was US$ 56.35 Million. World’s exports of agriculture to UK for the same month was US$ 5,187 million. If we compare monthly figures, India covers roughly 1.1% of agricultural needs of UK.
• If we see the growth rate of imports from India and UK, for agriculture products, India’s rate is significantly higher for all those products where India is experiencing positive exports growth
• The scope to improve and escalate our market presence in UK is immense. Even a 5% target will push our agricultural exports significantly.

India is going to initiate negotiation over an India-UK free trade agreement (FTA) this year, which is a separate trade agreement negotiation from the European Union (EU). After at least four years, a new FTA is getting initiated by India, and that too with a developed nation. With the benefit of hindsight, Indian policymakers should try to make this deal more lucrative in terms of realizing market share in UK, especially for Indian agriculture products. We have observed most of the times that agricultural goods are either ostracized from trade negotiations or they remain dormant while exercising trade agreements (Aksoy, 2004).

Statistically, it is noteworthy that UK is a net agriculture importer, as its net imports of said products amount to US$ 34 billion, as indicated in the graph below. Thus, it seems to be an excellent gateway for India to promote its agriculture products from scratch while negotiating the agreement.

Source: ITC Trade Map, 2020, figures for UK in US$ billion

Focus on agriculture Products

India has been one of the few countries whose primary exports post-COVID experienced a rise, which mainly includes cereals, animal and vegetable fats, sugar, fruits, vegetables, pharmaceuticals, processed oils and fats. This has been a litmus test for Indian exporters during the pandemic phase and they have justified their credentials.

Here, we will be analysing India’s agri exports to UK during the pandemic phase, i.e. from February 2020 till May 2020, which is the latest data available. This will be compared with UK’s overall monthly exports from the world. If the intensity to import by UK is higher from India than from the world overall, then Indian products have a huge potential to cover UK’s market if a trade agreement can be established.

Overall, India’s agriculture exports to UK in May 2020 stood at US$ 56.35 million. The world’s exports of agricultural products to UK for the same month were at US$ 5,187 million. If we compare the monthly figures, India covers roughly 1.1% of agricultural needs of UK. Hence, the scope to improve and escalate our market presence in UK is immense. Even a 5% target will push our agricultural exports significantly.

Table: India’s exports to UK as per product category under agriculture in US$ Million and growth rate in %. Highlighted rows show a positive growth during this four-month time period

Product	Feb ’20	Mar ’20	Apr ’20	May ’20	Growth (%)
0 Food & live animals	49.02	69.13	58.35	53.57	0.97
00 Live animals	0	0	0	0	–
01 Meat & meat preparations	0	0	0	0	–
02 Dairy products & eggs	0	0	0	0	–
03 Fish & shellfish	12.93	12.95	8.46	4.69	-29.28
04 Cereals	9.98	14.9	16.56	16.68	17.89
05 Vegetables & fruit	14.13	26	21.02	21.25	10.65
06 Sugar	0.3	0.39	0.25	0.98	36.87
07 Coffee, tea, cocoa etc	7.89	9.42	7.5	6.67	-7.09
08 Animal feeding stuffs	1.09	2.73	3.05	1.67	14.88
09 Miscellaneous foods	2.7	2.74	1.51	1.64	-18.89
1 Beverages & tobacco	0.14	0.18	0.1	0.62	46.99
11 Beverages	0.14	0.18	0.1	0.62	47.4
12 Tobacco	0	0	0	0	0.97
4 Animal & vegetable oils & fats	1.32	1.34	1.11	1.96	10.55
41 Animal oils & fats	0	0	0	0.05	–
42 Vegetable oils & fats	1.24	1.22	1.04	1.74	9.02
43 Processed oils & fats	0.08	0.12	0.08	0.17	18.76

Source: Office for National Statistics, UK

It is evident that India’s agricultural exports growth to UK remained significantly positive for cereals, fruits and vegetables, sugar, animal feeding stuff, beverages and tobacco, processed oil fats. These could be some of the products, which could find the place under positive list while negotiating for India-UK trade agreement.

A similar comparison is made for world’s exports to see the intensity to import for UK from India vis-s-vis the world for agricultural products.

Table: World’s exports to UK as per product category under agriculture in US$ million and growth rate in %. Highlighted rows show a positive growth during this four-month time period

Product	Feb ’20	Mar ’20	Apr ’20	May ’20	Growth in %
0 Food & live animals	3,976.7	4,637.1	4,288.7	4,193.8	0.8
00 Live animals	22.1	18.2	22.1	40.3	22.1
01 Meat & meat preparations	653.9	796.9	629.2	583.7	-5.6
02 Dairy products & eggs	300.3	362.7	313.3	351	3.3
03 Fish & shellfish	332.8	400.4	323.7	317.2	-3.5
04 Cereals	397.8	500.5	457.6	456.3	3.3
05 Vegetables & fruit	1209	1353.3	1388.4	1329.9	3.2
06 Sugar	120.9	98.8	118.3	87.1	-7.7
07 Coffee, tea, cocoa etc	396.5	425.1	390	367.9	-3.1
08 Animal feeding stuffs	228.8	276.9	230.1	280.8	4.4
09 Miscellaneous foods	314.6	404.3	416	379.6	6.1
1 Beverages & tobacco	730.6	861.9	820.3	841.1	3.8
11 Beverages	565.5	668.2	648.7	657.8	4.3
12 Tobacco	165.1	193.7	171.6	183.3	1.9
4 Animal & vegetable oils & fats	126.1	167.7	166.4	152.1	5.7
41 Animal oils & fats	7.8	7.8	13	10.4	14.7
42 Vegetable oils & fats	88.4	122.2	110.5	109.2	5.5
43 Processed oils & fats	29.9	37.7	42.9	32.5	3.9

Source: Office for national statistics, UK

If we see the growth rate of imports from India and UK, for agriculture products, India’s rate is significantly higher for all those products, where it is experiencing positive exports growth. So, going by India’s performance and potential in the domain of agriculture exports and that too during pandemic, it appears to be cogent that, by putting agriculture products in positive list, we can surely brand and escalate our products in UK directly.

Appendix: List of Agriculture Products where India is competitive and UK is also a significant importer of the products. After analysing UK’s imports, following products can be included in the positive list for negotiation:

List of Products:

Tariff Lines (at 8 digit)	Product Description
3061792	Frozen shrimps of the genus “penaeus”, even smoked, whether in shell or not, incl. shrimps
10062098	Long grain husked [brown] rice, length-width ratio >= 3 (excl. parboiled)
9024000	Black fermented tea and partly fermented tea, whether or not flavoured, in immediate packings
8061010	Fresh table grapes
17031000	Cane molasses resulting from the extraction or refining of sugar
10063098	Wholly milled long grain rice, length-width ratio >= 3, whether or not polished or glazed
7099960	Fresh or chilled sweetcorn
15153090	Castor oil and fractions thereof, whether or not refined, but not chemically modified
3061799	Frozen shrimps and prawns, even smoked, whether in shell or not, incl. shrimps and prawns
8045000	Fresh or dried guavas, mangoes and mangosteens
20019010	Mango chutney, prepared or preserved by vinegar or acetic acid
9042200	Fruits of the genus capsicum or of the genus pimenta, crushed or ground
10062017	Long grain husked [brown] rice, length-width ratio >= 3, parboiled
20055900	Unshelled beans “vigna spp., phaseolus spp.”, prepared or preserved otherwise than by vinegar
23040000	Oilcake and other solid residues, whether or not ground or in the form of pellets
9103000	Turmeric “curcuma”
7132000	Dried, shelled chickpeas “garbanzos”, whether or not skinned or split
20089948	Guavas, mangoes, mangosteens, papaws “papayas”, tamarinds, cashew apples, lychees,
8013200	Fresh or dried cashew nuts, shelled
20059980	Vegetables, prepared or preserved otherwise than by vinegar or acetic acid, not frozen
9011100	Coffee (excl. roasted and decaffeinated)
21039090	Sauces and preparations therefor, mixed condiments and mixed seasonings (excl. soya sauce
23080090	Maize stalks, maize leaves, fruit peel and other vegetable materials, waste, residues and by-products
7122000	Dried onions, whole, cut, sliced, broken or in powder, but not further prepared
9093100	Cumin seeds, neither crushed nor ground
12074090	Sesamum seeds, whether or not broken (excl. for sowing)
19059080	Pizzas, quiches and other bakers wares containing by weight …
21069092	Food preparations, n.e.s., not containing milkfats, sucrose, isoglucose starch or glucose or
13023210	Mucilages and thickeners of locust beans or bean seeds, whether or not modified
9109105	Curry
12119086	Plants and parts of plants, incl. seeds and fruits, used primarily in perfumery, in pharmacy
15159099	Solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically
20011000	Cucumbers and gherkins, prepared or preserved by vinegar or acetic acid
16052900	Shrimps and prawns, prepared or preserved, in airtight containers (excl. smoked)
21069098	Food preparations, n.e.s., containing, by weight, >= 1,5% milkfat, >= 5% sucrose or isoglucose,
10063067	Wholly milled long grain rice, length-width ratio >= 3, parboiled, whether or not polished
13023290	Mucilages and thickeners of guar seeds, whether or not modified
20089963	Guavas, mangoes, mangosteens, papaws “papayas”, tamarinds, cashew apples, lychees, jackfruit
21011100	Extracts, essences and concentrates, of coffee
24012085	Partly or wholly stemmed or stripped flue-cured tobacco, otherwise unmanufactured
9093200	Cumin seeds, crushed or ground
13023900	Mucilages and thickeners derived from vegetable products
14049000	Vegetable products n.e.s
10063048	Semi-milled long grain rice, length-width ratio >= 3 (excl. parboiled)
9041100	Pepper of the genus piper, neither crushed nor ground
13021970	Vegetable saps and extracts (excl. opium, liquorice, hops, vanilla oleoresin and genus ephedra)
11061000	Flour, meal and powder of peas, beans, lentils and the other dried leguminous vegetables
7133100	Dried, shelled beans of species “vigna mungo
8109075	Fresh fruit, edible (excl. nuts, bananas, dates, figs, pineapples, avocados, guavas, mangoes
9041200	Pepper of the genus piper, crushed or ground
6031100	Fresh cut roses and buds, of a kind suitable for bouquets or for ornamental purposes
9092200	Coriander seeds, crushed or ground
12130000	Cereal straw and husks, unprepared, whether or not chopped, ground, pressed or in the form
20049098	Vegetables and mixtures of vegetables, prepared or preserved otherwise than by vinegar or acetic
16052110	Shrimps and prawns, prepared or preserved, in immediate packings of a net content of <= 2 kg
9023000	Black fermented tea and partly fermented tea, whether or not flavoured, in immediate packings
12024200	Groundnuts, shelled, whether or not broken (excl. seed for sowing, roasted or otherwise cooked)
11010011	Durum wheat flour
3038990	Frozen fish, n.e.s.
9083100	Cardamoms, neither crushed nor ground
11010015	Flour of common wheat and spelt
7031019	Onions, fresh or chilled (excl. sets)
19019091	Food preparations of flour, groats, meal, starch or malt extract, containing no milkfats, sucrose
16042005	Preparations of surimi
3074338	Squid “loligo spp.”, frozen
9092100	Coriander seeds, neither crushed nor ground
19053191	Sweet sandwich biscuits, whether or not containing cocoa, containing < 8% milkfats
7096099	Fresh or chilled fruits of genus capsicum or pimenta
9101200	Ginger, crushed or ground
8134065	Dried tamarinds, cashew apples, lychees, jackfruit, sapodillo plums
9096100	Juniper berries and seeds of anise, badian, caraway or fennel, neither crushed nor ground
13019000	Lac; natural gums, resins, gum-resins, balsams and other natural oleoresins
9022000	Green tea in immediate packings of > 3 kg
20019097	Vegetables, fruit, nuts and other edible parts of plants, prepared or preserved by vinegar
3028990	Fresh or chilled fish, n.e.s.
20019020	Fruit of genus capsicum, prepared or preserved by vinegar or acetic acid
7149090	Jerusalem artichokes and similar roots and tubers with high inulin content, fresh, chilled
8023200	Fresh or dried walnuts, shelled
8011900	Fresh coconuts, whether or not shelled or peeled
20059950	Mixtures of vegetables, prepared or preserved otherwise than by vinegar or acetic acid, not
7139000	Dried, shelled leguminous vegetables, whether or not skinned or split
7099990	Fresh or chilled vegetables n.e.s.
16055400	Cuttlefish and squid, prepared or preserved
9062000	Crushed or ground cinnamon and cinnamon-tree flowers
7134000	Dried, shelled lentils, whether or not skinned or split
21039010	Mango chutney, liquid
20081110	Peanut butter
7129090	Dried vegetables and mixtures of vegetables, whole, cut, sliced, broken or in powder
8119085	Guavas, mangoes, mangosteens, papaws “papayas”, tamarinds, cashew apples, lychees, jackfruit
15155099	Sesame oil and its fractions, whether or not refined
3035990	Frozen Indian mackerels
7108095	Vegetables, whether or not cooked by boiling in water or by steaming, frozen
19012000	Mixes and doughs of flour, groats, meal, starch or malt extract, not containing cocoa
10063094	Wholly milled medium grain rice, whether or not polished or glazed (excl. parboiled)
9109910	Fenugreek seed
19023010	Dried, prepared pasta (excl. stuffed)
23091019	Dog or cat food, put up for retail sale, containing glucose, glucose syrup
9109991	Spices, neither crushed nor ground