Will the fair trade concept take off in India?

By: Saumya Roy, Shloka Nath

India is warming up to fair trade. But the concept remains a niche market as companies are hesitant about taking it to the masses

Indian farmers have been selling their fair trade produce to developed markets for years by getting certified by the Fairtrade Labelling Organizations International (FLO). Now the FLO wants to invert that model. It will introduce a fair trade label for the Indian market next year. The Spice Board of India is looking to follow suit with a fair trade label for the domestic spice market.

First, let's understand what fair trade is. Fair trade is an organised movement that helps producers in developing countries get a premium for their products if they follow better social, labour and environmental standards.

More than USD 4 billion worth of fair trade products were sold internationally in 2008, up 22% since the previous year. While sales of products like fair trade tea, coffee, flowers, wine and beer have grown in double digits for the last several years, cultivation has outpaced demand, according to reports.

If the fair trade movement is implemented in India, it could open up a huge new market for fair trade farmers, giving them stability against foreign exchange fluctuation.

For the movement to be successful, however, it requires the customers to be sensitive about this. "The size of the market is very small because Indians are not really concerned about this," says Arvind Singhal, chief executive of retail consulting company KSA Technopak. "Companies are trying to create fair trade brands for their own reasons but if the customer is not sensitive then this will have only a limited impact."