Explained: The Benefits For Indian Farmers From Free Trade Pact With UK

Indian farmers, who constitute nearly 44 per cent of the country's population, are poised to be the biggest winners of the free trade agreement between India and the United Kingdom, signed in London on Thursday. The pact -- officially called a comprehensive economic and trade agreement -- eliminates approximately 95 per cent of agricultural and processed food from tariff lines, opening premium UK markets for Indian produce, matching or even exceeding the benefits enjoyed by exporters from Germany, the Netherlands, and other European Union (EU) nations.

In agriculture, India exports USD 36.63 billion globally, while the UK imports USD 37.52 billion. But of this, the UK imports just USD 811 million worth of produce from India, leaving room for growth in high-value agri products. Britain is a high-value market for niche Indian agri-products like tea, mangoes, grapes, spices, and marine products, among other things.

Market Boost

Currently, the UK accounts for 1.7 per cent of India's coffee exports, 5.6 per cent of tea exports, and 2.9 per cent of spices. With the elimination of tariffs, these segments are expected to grow significantly. In particular, Indian instant coffee will be better positioned to compete with European exporters like Germany and Spain in the fast-growing premium segment.

Wider Market Access for Farmers

Under the trade deal, agri products including fruits, vegetables, cereals, pickles, spice mixes, fruit pulps, ready-to-eat meals and processed foods will now attract zero duties on entry into force. This will reduce the landing cost of these goods in the UK and enhance their competitiveness in both mainstream and ethnic retail chains, allowing Indian farmers to fetch premium prices for these products in the UK market.

The deal also opens up opportunities for new and emerging products like jackfruit, millets, vegetables, and organic herbs, encouraging farmers to diversify and better manage domestic price fluctuations.

Sensitive Sectors Protected

The deal will also exclude some of India's most sensitive agri sectors like dairy products, apples, oats, and edible oils, to protect domestic farmers. There are no tariff concessions on these sectors, reflecting India's calibrated trade strategy to prioritise food security and domestic price stability. 

Boost To Blue Economy

The agreement will provide a major boost to India's fisheries sector, particularly in coastal states like Andhra Pradesh, Odisha, Kerala, and Tamil Nadu. By offering zero-duty access for 99 per cent of exports such as shrimp, tuna, fishmeal, and feeds, which currently face duties between 4.2 to 8.5 per cent, the deal is expected to unlock rapid growth in India's seafood exports. The UK's marine import market, valued at USD 5.4 billion, offers a huge opportunity for India's blue economy.

With the deal in place, India's agriculture exports to the United Kingdom are expected to grow by over 20 per cent over the next three years. This increase will be driven by duty-free access for a wide range of Indian agricultural and processed food products, contributing to India's goal of $100 billion agri-exports by 2030.