Milk import is a concern in FTA talks

NEW DELHI: A suggestion by Indian trade negotiators to reduce the tariff on milk imported from New Zealand has generated a massive protest of Amul , the largest producer in the country, as well as political leaders, including the prime minister of Gujarat Vijay Rupani .

During the negotiations for Regional Integral Economic Association (RCEP) Agreement, which includes ASEAN, China, Australia, New Zealand, Japan and South Korea, Indian officials suggested that the government might consider reducing import tariffs on milk and dairy products of the island nation, although no formal offer has been presented on the table. Separately, the commerce department had a group of experts to analyze the possible opening options.

Trade negotiators admitted that a mere suggestion is enough for a country to press for it. The fear is that opening the doors to a similar lawsuit from Australia, which had been searching for the same benefit for years, but faced resistance from the government.

In a presentation of more than 40 slides for the Ministry of Commerce and Industry. Piyush Goyal , Amul made a case against easing imports of milk and dairy products and suggested that just 5% import of milk and dairy products from New Zealand could have a devastating impact.

"The developed world wants to dump its surplus in India... And wants lower duties to compensate (for) their high cost," it said, adding that Indian dairy sector was able to meet the demand for value-added dairy products such as curd, yoghurt, cheese and paneer, whose demand is rising due to higher purchasing power. It suggested that India was not just self-sufficient in milk but could tap potential export market in the neighbourhood.

A leading trade expert, who did not wish to be identified, said that unlike India, New Zealand has more milch animals than its population, resulting in a massive surplus of milk. Amul has estimated that 93% of New Zealand's dairy products are exported. If the market for milk is depressed, they export beef using the same animals, the trade expert added.

Diary cooperative has suggested that by lowering import duty on milk and dairy products , India could end up repeating the experience in the edible oil space, where it is now 65% import dependent. It also cited the example of China, where imports surged after it signed FTA with New Zealand.