AIKS demands suspension of the Indo-UK FTA -CETA- for domination of foreign agri-business on domestic trade
The governments of India and UK signed a Comprehensive Economic and Trade Agreement (CETA) on 24 July 2025. Media reports based on the official versions have generated strong expectations that CETA will lead to robust economic growth in both the slowing economies. The Modi government has gone to the extend to claim that CETA will be of great benefit to Indian farmers.
However, experiences show that any benefits of such deals are cornered by few large players in the economy. The benefits to smaller players truly depend upon the capacity, cost competitiveness and readiness to harvest the so-called “new opportunities”. Opportunities for enhanced trade due to the removal of tariff barriers on a range of product lines depends on extensive coordinated actions by the Indian government to build competitiveness of the economy through modern common infrastructure and facilitating technology absorption in the larger economy.
The policies of the Modi Government are, in fact, contrary to this required objective. By denying remunerative minimum support price to farmers, keeping small and marginal farmers under deep indebtedness, withdrawing subsidies on inputs and escalating cost of production thus eroding the profitability of agriculture, curtailing public investment in agricultural infrastructure, promoting corporate takeover of agricultural land and farm markets and not building an efficient supply chain, the Modi government has ruined the competitiveness of Indian farmers even as it has supplied selected benefits to crony capitalists like Adani in the agricultural sector. As a result, the benefits that might flow to Indian agriculture will be accrued by large players and crony capitalists and farmers will be further squeezed. The exuberance on signing the deal that follows from these realities should displace attention from the real hard tasks, challenges and dangers ahead. The CETA per se is not going to solve the issues in India’s large agricultural sector.
Reduction in tariff on exports does not guarantee remunerative prices to domestic farmers. It is required to recall the impact of India- ASEAN agreement of 2011 on the domestic rubber production sector that has devastated the economy of Kerala. The price of raw rubber sheets fell from Rs. 240 per kilo to just Rs.70 per kilo in 2011 and then got stabilised at Rs.110 for more than ten long years. The price crash of natural rubber caused an annual loss of a whopping Rs.7840 crore for rubber farmers in Kerala alone. The annual production of natural rubber in Kerala has been dropped from 9.5 lakh tonnes to 5.5 lakh tonnes during this period. The ASEAN –FTA had given preferential access to the ASEAN markets. But, India could not take advantage and increase exports. However, the ASEAN countries could exploit the preferential access given to India. That is why the trade gap between India and ASEAN widened after formalizing the FTA.
Large numbers of primary products appear in the list where the tariffs are to be eliminated or cut drastically in the Indo-UK FTA. They include a wide variety of marine products such as Salmon, sardines, Mackerel, Tuna, Hilsa, crustaceans, etc., in fresh and processed form. Many meat category items such as lamb fresh or chilled, etc., also appear in the list. Vegetable and fruit products such as Spinach, Mushrooms, Watermelons, Apricots, Custard apple, Mangoes, Mango pulp, Bananas, Yams, Taro, curry plantains, Tamarind, etc., also figure in the list identified for drastic tariff cuts. Spices and processed spices are also seen among the products listed for tariff cuts. Same is the case with Maize Flour, Rye flour, Brown rice flour, Oats of Maize, Sugar Beet, Betel Leaves, Cocoa Beans, Cocoa powder, Malted milk, etc.
Apart from primary agricultural products there are processed food products based on farm produce such as beverages, appearing in the lists. Wine and a variety of alcoholic beverages are immediate targets of liberalization. Same is the case of food products or other value added agricultural products. The U.K does not produce some of the agricultural or other primary products listed above. But, such products can enter the Indian market claiming to have originated in the U.K. Such violation of the rules of origin is reported in the context of other FTAs.
The U.K is known to export processed and value added products based on primary products. The list of areas earmarked for phasing out tariffs does not augur well for India. There is a long list of manufactures and vehicles that are given tariff concessions to enter the Indian markets. Many of these products are luxury products consumed by the rich in India. Obviously there will be a sustained increase in the imports from the U.K but there could not be a matching increase in India’s exports to the U.K in the context of the lack of competitiveness. The FTA may open the flood gate of processed food in the Indian market and the drain of agricultural products to Britain thus affecting the growth of domestic agriculture and industry and bring new forms of colonization.
Western countries including the UK regularly use non-tariff measures to block or slow agricultural imports from countries like India. Such standards are always applied arbitrarily and to disproportionately benefit the Western countries. If this happens, all the potential gains from CETA will turn out to be its very opposite: net losses for India. It must be noted that agricultural trade between India and the UK is only a miniscule portion of their overall trade and agricultural imports from India constitute less than 1% of UK’s total imports. Thus, while agriculture may be an area of major concern for India, it may not be so for the UK given the overall structure of trade flows between the two countries.
India’s WTO bound rates are quite high in the case of most agricultural products. WTO negotiations take place taking bound rates as the base rates. But, in the UK India FTA base rates are not the WTO bound rates. Instead applied rates are taken. Applied rates are generally lower than the bound rates. This is a problem India encountered in the case of the India-ASEAN FTA also. India is made to start the tariff cutting exercises from a point much lower than India’s WTO bound rates. This aspect assumes importance because developing countries including India had to fight a tough battle in the WTO to maintain high bound rates for agricultural products.
The weakening of multilateralism and increasing reliance on bilateral trade deals under pressure of developed countries must be resisted. The shift from rule-based multilateral system of governance of India should have rallied other less-developed countries towards this goal. On the contrary, the Modi government has completely succumbed to these pressures and is busy signing bilateral trade deals.
For the last three decades, advocates of trade liberalisation have pushed their agenda by promoting the false promise that export opportunities would benefit Indian farmers. The CETA is yet another attempt in the same direction. The experience of the last three decades has shown that this is a false propaganda and is only used to progressively open Indian markets to agricultural imports from developed countries. This is clear from increased import dependence for edible oils, pulses, fruits, rubber and many other commodities.
Even though some of these bilateral trade deals are being negotiated to keep out core agricultural products of India, the threat that these deals pose must not be under-estimated. Once a trade agreement is signed and implemented, there will be pressure to expand the scope of these agreements to include other products. This is the hidden “chronology” that must be understood. Bilateral trade agreements may be designed to initially seem attractive as a ploy to blunt political opposition. This seems to be the strategy behind the CETA and the agreement being negotiated with the US. The dangers of these agreements go far beyond the specific terms of these agreements and can open many doors to large markets of countries like India they open for the developed countries.
The Indo-UK FTA has the potential to open the Indian economy to the vagaries of international trade and speculation and endangering peasantry and the entire working people to face the intensifying agrarian crisis and domination of foreign agri-business on the domestic industry. AIKS demands all the political parties to demand immediate suspension of the Indo- UK FTA.
With regards,
Vijoo Krishnan
General Secretary
Ashok Dhawale
President
