New Delhi, Apr 27 (PTI) India has not offered any duty concessions in the dairy sector under any of its free trade agreements so far, including those with the European Union, the UK, New Zealand, and Australia, Commerce and Industry Minister Piyush Goyal on Monday.
He said India’s dairy sector is driven by very small and marginal farmers with limited landholdings who own only a few cattle.
These farmers has a “very” low production and needs to be protected against large farms that Europe, America, Australia, or New Zealand have.
“India has had a very consistent stand in all our FTAs across the world, whether it is European Union, Switzerland… UK, USA, Australia, New Zealand. Never has India opened the dairy sector. Everybody in this room knows it. Everybody in the world knows it,” he told reporters here after signing a trade pact with New Zealand.
This is a known position, and there is nothing new in this, he said.
However, he added that as per India’s foreign trade policy, the government allows foreign firms to bring raw materials or ingredients into India, process them to make high-quality products and then re-export 100 per cent of those goods.
That product is not allowed to be sold in the country, he said.
“So it doesn’t hurt the Indian market, doesn’t hurt the Indian farmers, but adds to our foreign exchange income, adds jobs to our youth, provides opportunities for our farmers also to possibly supplement for further re-export. So it’s a win-win for both countries,” Goyal said.
The India-New Zealand trade pact has an investment arrangement under which firms from the Oceania country can bring raw materials or ingredients from the dairy sector into India, process them to make high-quality products and then re-export 100 per cent of those goods.
These dedicated fast-track arrangements will be used exclusively for the manufacture of products destined solely for export, thereby safeguarding the interests of the domestic industry.
New Zealand is one of the world’s largest dairy exporters. Its dairy exports to India in FY25 totalled just USD 1.07 million, consisting of milk and cream (USD 0.40 million), natural honey (USD 0.32 million), mozzarella cheese (USD 0.18 million), butter (USD 0.09 million) and skimmed milk (USD 0.08 million).
Under the FTA, India would grant quota-based duty concessions on Albumins (a milk protein product) and bulk infant formula from New Zealand with Minimum Import Price and other safeguards.
Tariffs on bulk infant formula and other dairy-based preparations, and peptones (a dairy-based product) would be phased out by India in over seven years, according to New Zealand’s Foreign Affairs and Trade ministry statement.
Further, the two countries have also committed to collaborate on developing domestic payments interoperability and supporting real-time cross-border remittances and merchant payments through integrated Fast Payment Systems (FPS).
This provision directly strengthens India’s digital payments ecosystem and fintech sector, enhances remittance flows from the Indian diaspora, creates market opportunities for Indian payment service providers and leverages India’s technological expertise in digital payment systems such as UPI and NPCI.
Asked by when this system will be in place, New Zealand’s Trade and Investment Minister Todd McClay said it is actually is for the Reserve Bank under New Zealand law to do that, not for the government.
“But we’re going through a process at the moment where we’re looking at our banking regulations and looking towards open banking to allow more products to come to the market that will serve our citizens,” he said, adding, “I can’t tell you how quickly this could happen because the responsibility sits away from government.” Goyal said central bankers will be engaged on this and it is a very complex process to align the two systems.
“But once it gets kick-started, it doesn’t matter a few months here and there, but the long-term benefits, particularly in costs of remittances, the additional conversion and exchange rate losses that both sides suffer will come down very significantly. And that’s a big boost to competitiveness and possibly growth in trade between the two nations,” Goyal added. PTI RR TRB TRB
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