UK-India Trade Agreement: British millers worry that a possible reduction in the tariff on white rice might destroy domestic business

 UK-India Trade Agreement: British millers worry that a possible reduction in the tariff on white rice might destroy domestic business

As Britain and India go closer to signing a long-awaited free-trade agreement (FTA), a $1 billion ($1.2 billion) segment of the UK economy is worried about its future. 

By importing low-tariff unmilled brown rice from countries like India and Pakistan and "polishing" the grains into the white product that UK customers appreciate, British rice millers like Tilda and Veetee Rice have prospered for decades. 

But fears are growing for an industry that employs more than 3,000 people at 16 mills and processing factories dispersed from Kent in southern England to Yorkshire in the north as India pushes for tariffs on white rice to be reduced and British trade authorities provide little comment. 

At a private session in the House of Commons last month, rice industry executives and government representatives heard Alex Waugh, departing director of The Rice Association, stress the need of maintaining the current tariffs on milled (white) rice. "If access to milled rice is granted, the foundation of operations will be weakened, future investment incentives in the UK will be eliminated, and ultimately, jobs will disappear."

Aim-High Trade Agreement

An spokesman from the UK Department for Business and Trade claimed that efforts were being made to reach a "ambitious trade deal."

"We have always been clear that we as a species will only sign a deal that is fair, balanced, as well as ultimately in the most beneficial interests of the British people and the economy," the spokesman added.

A main benefit of Brexit was supposed to be a trade deal between the UK and India. The argument made the case that, freed from the restrictions of the European Union, Britain could leverage a common history and language to build a historic agreement with the world's most populous country and fastest-growing major economy.

In reality, the discussions that were started under Boris Johnson in January of last year have been beset by uncertainty and fighting over a variety of issues, including visas for Indian workers and students and market access for UK producers of fine whiskey and vehicles. 

Rishi Sunak, his successor, is a devout Hindu, the son of Indian immigrants, as well as the son-in-law of Infosys co-founder Narayana Murthy. However, expectations that he would make a difference have come up short.

Both parties are hopeful that a deal can be reached this year since the UK and India are now engaged in their 13th round of trade discussions. However, companies complaining of a lack of information from British authorities claim that the destiny of British rice millers is still unknown. 

UK and India Likely to Push Trade Deal Talks Into Next Month One individual with knowledge of the UK dialogue claimed that the issue of rice tariffs was still open for discussion and that the two parties were still working out some of the more "difficult" details of a trade deal.

A other source familiar with the Indian negotiation team said that the issue of rice tariffs was very delicate and that no deal had yet been achieved.

The difficulty in reaching a compromise highlights the challenges the UK may face in negotiating trade agreements with other nations after Brexit. 

Farmers in Britain are already upset about its agreement with Australia. The National Farmers Union's Minette Batters said that she was "increasingly concerned about the long-term effects of the government's FTA program" on UK businesses.

Currently, India is the source of a fourth of the UK's total rice imports, or around 150,000 metric tons, of which are imported as brown rice. This is affordable because to import duties. If brown basmati is on a list of special types, there is no tax, which is £25 per ton. At around £121 per ton, it is far less than the tax on white basmati.

Industry leaders assert that lowering the tariff on white rice will force the closure of UK mills while providing consumers with minor price advantages, jeopardizing supply security, and perhaps increasing the danger of a decline in quality. 

Waugh claims that India would not benefit much from reduced UK tariffs. He said that since UK mills must ensure pesticide compliance and are more eager to obtain rice with greater sustainability credentials, they prefer to pay farmers in the nation more for their brown rice than do local players. 

The amounts of their milled rice that would be sent to the UK, however, are probably too little for Indian millers to significantly increase their revenues.

Cons The negative effects for the UK go beyond diminished employment and output, Waugh said. When domestic supplies are low, India is renowned for restricting rice exports, with white rice often being the first to be banned. The South Asian country now imposes limitations on every type sent outside. To mitigate such volatility, UK millers maintain a sizable stockpile, which may now be in jeopardy.

Additionally, British companies are skilled at adhering to food safety rules, which is crucial given that minimal border inspections are performed on imported goods. 60 distinct varieties of basmati rice were recently taste-tested by the Rice Association. It was discovered that 50% of the samples that were milled and packaged in Pakistan or India conformed with UK requirements. Comparatively, just one sample that was milled and packaged in the UK was found to be barely non-compliant.

Executives in the UK rice sector have been perplexed by their interactions with Indian authorities as trade discussions have heated up.

A car-parts company and Jon Calland, the head of the Rice Association, were invited to the Indian High Commission in London early this year. I've never attended a conference like that, he said. It seemed as if they were attempting to pit us against one another.

Calland outlined the benefits of the existing price structure to representatives from India's Ministry of Commerce and Industry over cups of tea. Calland recommended that India seek for the addition of additional varieties of brown basmati rice to the restricted list of tariff-free products if any compromises have to be made. This viewpoint, which would benefit Indian farmers and is widely backed by UK millers, is also believed to be supported by the British government.

To the relief of its rice millers, Moni Varma, who launched Veetee Rice in 1987, thinks the UK could be on track to get its way. Varma said that during a recent phone contact with Indian negotiators, he had the feeling that "they understand that they're not going to get what they want on rice."

"The UK is not that great a rice market that it's going to make a dent in India's budget," the man added. However, you can't tell until it's completed.