The dairy sector has warned that the proposed Regional Comprehensive Economic Partnership (RCEP) could upend the country’s only steady source of farm income. The sector spelt out its stand during consultations with the commerce ministry on September 18.
Major dairy cooperatives said New Zealand’s entry and possible duty-free imports of skimmed milk powder could price out 100 million farmers at a time when the economy is the midst of a worrying slowdown.
Additional secretary in the ministry Sudhanshu Pandey told participants, including top milk producers, that farmers’ interests would be protected at all costs, as India prepares to be part of a grand regional free-trade agreement of 16 East Asian countries.
RCEP is a proposed free trade agreement (FTA) between the 10 members of the Association of Southeast Asian Nations (ASEAN) and its six partners -- China, Japan, India, South Korea, Australia and New Zealand. ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
On September 8, commerce minister Piyush Goyal had travelled to Bangkok to attend the 7th RCEP meeting in Bangkok, in which member-countries resolved to close the deal by November.
The commerce ministry’s stance that farmers’ interests would be given utmost importance was a clear signal that there may not be a free run for all kinds of dairy imports, a participant said. “By implications, it means skimmed milk power would be kept out,” said R.S. Sodhi, the managing director of the Gujarat Cooperative Milk Marketing Federation Ltd, the country’s largest dairy cooperative and owner of the Amul brand.
“Prime Minister Narendra Modi has directed me to enter RCEP negotiations while taking all steps to protect the domestic industry,” Goyal had told reporters after a similar consultation with exporters. In the context of RCEP, the process of consultations has been going on for a month and will continue, a spokesperson for the commerce ministry said.
India is pushing for greater market access to boost exports, a key engine of economic growth. Sluggish exports are a key reason for the current slowdown. For instance, India’s agricultural exports grew five times from about $8.7 billion in 2004-05 to $42.6 billion during 2013-14. This, however, fell to $33 billion in 2016-17.
India has free-trade pacts with Japan and South Korea. Two more are in the offing, with Australia and New Zealand.
Experts say India’s lack of competitiveness in exports mean it can’t take advantage of free trade agreements. “We can’t assume free-trade agreements will alone work. We need to walk on two legs. We need a parallel process to increase trade competitiveness,” said Biswajit Dhar, a professor at Jawaharlal Nehru University, who advised the government on World Trade Organisation talks.
“Duty-free imports of milk products will take out the only commodity that gives farmers liquidity because payments are made on a daily basis,” said RG Chandramogan, chairman of Hatsun Agro Products Ltd, southern India’s largest dairy firm.