British Prime Minister Rishi Sunak has reiterated his commitment to closer India-UK ties across different sectors, including a free trade agreement (FTA) between the two countries.

 

Addressing a reception by the diaspora group Conservative Friends of India (CFIN) on the sidelines of the ongoing Conservative Party conference in Manchester on Monday evening, the British Indian leader began by reflecting upon his 'successful' first visit to India as Prime Minister for the India-led G20 Summit last month.

 

'I've just come back from my first trip to India as Prime Minister and that was very successful,' said Sunak.

 

'Everybody here already knows just how strong the relationship between our two countries is. At the G20, we really saw a glimpse of what the future of that relationship can be, with closer cooperation on absolutely everything from trade to defence, innovation, security, research, and I hope... a free trade deal, and we can get it done,' he said.

 

The 43-year-old politician, who is leading his first Conservative Party conference as leader of the governing party, went on to say that he hopes to build on the success of his first India visit to work together as two 'great democracies, shaping the future of the world for the long term'.

 

'We're working together as partners to build a better future for all our citizens,' he added.

 

His visit to New Delhi for the G20 Leaders' Summit in early September had also concluded with a commitment to an India-UK FTA, even as Sunak told reporters that he 'won't rush things'.

 

Later in the month, amid a diplomatic standoff between two of its close allies - India and Canada - over the contentious issue of pro-Khalistan extremism, Sunak's spokesperson at 10 Downing Street had reiterated that trade talks with New Delhi remain on track.

 

'Work on the trade negotiations will continue as before... when we have concerns with countries we're negotiating trade deals with, we'll raise them directly,' the spokesperson told reporters.

 

According to official UK Department for Business and Trade (DBT) figures, UK-India bilateral trade was worth an estimated 36 billion pounds in 2022.

 

'We have never set a deadline. I think this is very optimistic briefing for newspapers. We are very close. It is possible, but I wouldn't be setting that sort of deadline. We will finish when we finish,' UK Business and Trade Secretary Kemi Badenoch told a UK parliamentary panel recently when asked about the prospect of a return visit by Sunak over the cricket World Cup in India to sign off on an FTA.

 

Earlier, Badenoch had reviewed progress on the trade talks with her Indian counterpart, Commerce and Industry Minister Piyush Goyal, during a visit to India in August coinciding with Round 12 of the FTA negotiations.

 

The 15th Meeting of the Joint Working Group on Trade (JWG) between India and Bangladesh was held on 26th and 27th September, 2023 in Dhaka, Bangladesh. The meeting was co-chaired by Joint Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of India, Shri Vipul Bansal and Additional Secretary, Ministry of Commerce, Government of the People’s Republic of Bangladesh, Mr. Noor Md. Mahbubul Haq.

 

The 15th Meeting of JWG discussed a host of bilateral issues such as removal of port restrictions, ground work on commencement of Comprehensive Economic Partnership Agreement (CEPA), harmonization of standards, mutual recognition of standards, supply of essential commodities to Bangladesh, development of road and rail infrastructure, regional connectivity through multi-modal transportation and creation/ strengthening of infrastructure in Land Customs Stations/ Integrated Check Posts, border haats, etc. 

 

The bilateral meeting successfully concluded with both countries reaffirming their commitment to deeper economic engagement, regional cooperation, and sustainable development. Both sides reiterated that the future holds great promise for enhanced trade relations and mutual prosperity.

 

The India-Bangladesh Joint Working Group on Trade (JWG) Meetings are held on an annual basis to discuss key trade related issues and explore opportunities for economic and technical collaboration, promotion, facilitation, expansion and diversification of trade between the two countries on the basis of equality and mutual benefit. These meetings play a vital role in quick resolution of bilateral issues by removing trade barriers, simplifying customs procedures, improvement of infrastructure, logistics, and transit facilities to facilitate smoother cross-border trade.

 

Several trade facilitative measures have been undertaken by both India and Bangladesh for facilitating trade between the countries. India has allowed exports from Bangladesh to India by rail in closed containers, with customs clearance facility at any Inland Container Depot (ICD) vide circular dated 17th May 2022. Bangladesh informed about successful commencement of Agreement on the use of Chattogram and Mongla Port (ACMP) and increasing the number of goods to be traded through various Land Custom Stations (LCSs).

The European Union has said it is willing to negotiate on global trade norms on the way governments purchase, stockpile and distribute food to ensure food security, issues pushed by India at the World Trade Organisation and deadlocked for the past 10 years.

 

The move is seen as a significant breakthrough ahead of a key ministerial conference of the WTO next year where India, among 80 others is keen on a deal on food security, insisting that the extant rules don't adequately address market failures such as food hoarding and market speculation that drive up food prices and inflation during crises.

 

'The EU has shown willingness to negotiate the public stockholding issue with India,' said a Geneva-based official.

 

The grouping of 80 countries has said that a permanent solution for public stockholding should account for inflation and also be based on a recent reference price instead of an old one, which is based on 1986-88 prices. They have also proposed to amend the anti-circumvention clause in the Bali Ministerial Declaration of 2013, as per which developing countries who procure food stocks for security 'do not distort trade or adversely affect the food security of other members'.

 

The US and the EU have so far opposed this approach. At an agriculture negotiations meeting of the WTO on Monday, the EU in a significant change in stance said a safeguards mechanism to prevent illegitimate exports stemming from excessive food stocks were key to deal with the possible impact of public stockholding policies. Public stockholding is a policy tool used by governments to purchase, stockpile and distribute food when needed.

India needs to grow at 8% to achieve its goal of becoming a developed economy by 2047, and private investment needs to pick up to support it, the World Bank's India country director, Auguste Tano Kouame, said on Tuesday.

 

The World Bank has, in its India Development Update released on Tuesday, kept India's growth forecast for FY24 unchanged at 6.3% despite moderating consumption and challenging global environment.

 

'The 6.3% growth forecast for India is still going to be one of the highest growth rates among major economies in the world,' Kouame told ET in an interview. 'So, India's growth rate is very respectable.'

 

Resilient economy

Although high inflation and high interest rate environment are a downside risk to the forecast, he underlined the resilience of the Indian economy to global headwinds.

 

'India has been very resilient, one of the most resilient economies to the headwinds, whether there are headwinds from geopolitics or inflation of exchange rates,' he said, highlighting that the country has a comfortable level of foreign reserves to manage currency volatility. The World Bank has priced in oil at $90 per barrel as a baseline for its inflation and growth forecast.

 

The multilateral lender sharply revised the inflation outlook for FY24 to 5.9%, moving closer to the Reserve Bank of India's upper band level.

 

Private investment focus

Kouame said conditions will remain conducive for private investment despite high inflation.

 

'Tapping public spending that crowds in more private investments will create more favourable conditions for India to seize global opportunities in the future, and thus achieve higher growth,' he said. Kouame pointed out that while public investment is necessary, it is not a sufficient condition to lure the private sector.

'In addition to public investment, you also need policies and reforms and regulations that make it easier and more attractive for the private sector,' he said.

 

Kouame said that India needs reforms to make it easier for the private sector to access land, skilled workers and easier for the micro, small and medium enterprises (MSMEs) to access credit.

 

Kouame observed that the economy would overcome the savings challenge as well, and noted that India should reach the investment-to-GDP ratio of 35%, for which savings in the country need to grow to 32% of the GDP. 'I think savings are going to be higher, going forward, because people save when they can trust the banking system, and, in India, the financial sector is very strong,' Kouame said, highlighting that savings will pick up again.

India has urged WTO members to start text-based negotiations from this month on finding a permanent solution to the issue of public stockholding for food security purposes, an official has said. The official added that the European Union (EU) is ready for talks with India on the stockholding issue.

 

The issue came up for discussion at an agriculture negotiations meeting on October 2 in Geneva. It was chaired by Ambassador Alparslan Acarsoy of Turkiye.

 

At that meeting, the EU offered a positive response to the chair's textual suggestions related to the safeguards mechanism aimed at preventing illegitimate exports stemming from excessive food stocks, the official said.

 

The Geneva-based trade official also said that the EU explicitly recognized that the safeguards and anti-circumvention are indeed the key provisions which deal with the possible impact of public stockholding policies.

 

'India urged members to commence text-based negotiations as soon as possible, preferably at the senior official level meeting scheduled for late October,' the official said.

 

Under text-based negotiations in WTO, an agreement is finalised around draft texts floated by the chair of a particular committee dealing with the subject. The draft is based on discussions amongst the member countries and is fine-tuned till all the nations are in agreement with it.

 

India reiterated the importance of discussing external reference prices to accurately assess farm support in relation to public stockholding.

 

The issue of finding a permanent solution to the public stockholding programmes for food security purposes is important for developing countries like India as it provides support measures and procures rice from farmers at MSP (minimum support price) and sells at cheaper rates to poor populations for food security.

 

Developed countries term these support measures as trade distorting subsidies and they are against these programmes of public stockholding of food.

 

According to them, this procurement violates the prescribed limit of providing subsidies and WTO's agreement on agriculture. They also demand notification to WTO (World Trade Organization) by emerging economies about their programmes.

 

Developing economies like India are of the view that there is a need to change the way this subsidy limit is calculated.

 

They also demand a significant cut of subsidies being given to farmers of developed countries.

 

India has pitched for the need to recalculate the external reference prices to reflect the impact of inflation and other economic factors on food stock prices.

 

In 2013, it was agreed by the WTO members to find a permanent solution to these issues and till then there is a 'peace clause' under which no country would file any legal complaint against another member even if the 10 per cent level is breached.

 

As part of a permanent solution, India has asked for things like amendments in the formula to calculate the food subsidy cap and inclusion of programmes implemented after 2013 under the ambit of 'Peace Clause'.

 

At the agriculture negotiations meeting on October 2, the chair asked members to consider several proposed safeguards and anti-circumvention provisions as potential breakthroughs for the highly debated permanent solution for public stockholding.

 

'This topic of public stockholding is crucial for achieving an outcome on agriculture at the next ministerial conference in February 2024. India has been a leading advocate for this initiative and has been, arguably, the largest beneficiary of the Bali interim solution, with the US disputing that the interim arrangement has contributed to India becoming the top exporter of rice,' the official said.

 

In previous meetings, the US has specifically called out India for exceeding limits on rice stocks under the Bali interim decision.

 

Under global trade norms, a WTO member country's food subsidy bill should not breach the limit of 10 per cent of the value of production based on the reference price of 1986-88.

 

Subsidies over and above the prescribed ceiling are seen as trade distorting. The limit is fixed at 10 per cent of the value of food production for developing countries like India.

 

India has earlier informed WTO that it has used the peace clause to provide excess support measures to rice farmers for marketing year 2020-21, in order to meet the domestic food security needs of its poor population.

 

In the meeting, India expressed gratitude to the EU for changing its stance and showing a willingness to negotiate on the public stockholding issue.

 

Several African and Asian countries have echoed India's view, emphasizing the urgency of negotiating a permanent solution on public stockholding in times of crisis.

 

The issue is expected to figure prominently in the 13th WTO Ministerial Conference (MC13) that will take place in February 2024 in Abu Dhabi, United Arab Emirates. MC is the highest decision making body of the 164-member multi-lateral body.

 

Côte d'Ivoire, known as the world's largest cocoa producer, has reached out to India with a proposal to source cocoa directly from their country due to a significant rise in cocoa product consumption.

 

They plan to send a high-level delegation to India in the coming month for negotiations with the Indian government and potential partners and investors, particularly in the processing and value-added segments of the cocoa industry within their nation.

 

Despite producing a substantial 2-2.2 million tonnes of cocoa, which accounts for 45% of the global cocoa output totalling 5 million tonnes, Ivorian cocoa farmers have not been reaping the expected benefits.

 

In an effort to capitalize on their leading cocoa production status, Côte d'Ivoire has decided to explore direct marketing of cocoa.

 

However, their recently announced farmgate price of 1,000 francs, issued by the cocoa regulator on September 30, is still considered low, especially when compared to global cocoa prices.

 

The cocoa trade traditionally sees established players dominate, and these entities often enjoy the lion's share of the profits.

 

Therefore, Côte d'Ivoire is now focusing on promoting cocoa processing to increase the value of the commodity before selling it. They are actively seeking partnerships and the establishment of processing facilities to achieve this goal.

 

Yves Brahima Kone, the Managing Director of the regulator, stated during the International Exhibition of Agriculture and Animal Resources (SARA) that they plan to visit India in November to meet with potential partners and government officials to discuss the direct marketing of cocoa.

 

The objective is to market cocoa products or semi-finished goods, thus generating higher income for the country.

 

Regarding the high import duties on cocoa in India, it is expected to be a topic of discussion during their upcoming negotiations. The Ivorian regulator believes that these discussions will result in a mutually beneficial situation for both nations, enhancing cocoa trade and potentially leading to better returns for Ivorian cocoa farmers while meeting India's cocoa demands more efficiently.

If you chance upon a random person in a conference or in a hotel in Abidjan, the capital of Cote d’Ivoire (which is also known as Ivory Coast), and introduce yourself as someone visiting from India, the first question that confronts you will be – 'when is your country lifting the ban on rice exports?'

 

There is a reason for their anticipation. Prices of rice in the country with a population of 29 million have shot up by 25-30 per cent ever since India curbed rice exports a few months ago. Though it is predominantly an agricultural country, its focus is entirely on cocoa, rubber and coffee, with rice being grown only in 6 per cent of the country’s arable land.

 

While India banned exports of white rice on July 20, it imposed a 20 per cent export duty on parboiled rice from August 26.

 

4th largest importer

'It is not just about Cote d’Ivoire; it holds good for all of the West African bloc and some other African countries. We hope we get Indian rice sooner,' a person involved in agricultural trade said.

 

The rice-eating Cote d’Ivoire, like some of its African peers, depends on rice imports, mainly parboiled, to meet its domestic demand. That Cote d’Ivoire is the fourth largest importer of Indian rice shows how dependent it is on India. It contributed to 6.6 per cent of India’s total non-basmati rice export of 18 million tonnes in 2022-23. The aggregate value of its rice imports from India was $420 million.

 

'The increase in rice prices in the city is as high as 30 per cent after the ban (on white rice). A 25-kg bag is being sold at 19,000CFA francs (XOF in currency market) against 14,000 francs before theban on exports early this year,' Isabelle (name changed), a homemaker, said. (One Indian rupee fetches you around 7.5 local francs.)

 

Used to Indian rice

'We eat it three times a day and we don’t produce rice. It’s cheaper for us to import it rather than growing it here. Though there are other alternatives such as China, Thailand and Vietnam for importing rice and substitute the imports from India, we are hooked to the taste of Indian rice,' said.

 

The US Department of Agriculture in its mid-September 2023 said the sharp increase in rice prices (following India’s export ban) 'is expected to disproportionately impact countries in import-dependent Sub-Saharan Africa'.

 

Three of the top five India’s export markets are in Sub-Saharan Africa – Benin, Senegal, and Cote d’Ivoire – with each receiving more than one million tonnes of Indian rice in 2022. India is, by far, the largest supplier to these countries and many others in the region. Cote d’Ivoire imported 1.2 million tonnes from India in 2022-23.

 

According to an IFPRI (International Food Policy Research Institute) blog, India’s rice market share in 2022 exceeded 80 per cent for several African countries, reflecting the heavy dependence on Indian rice.

 

N’Khoh Abroise, a cocoa farmer from Abey Benigni village, which is a two-hour drive from the country’s capital, said Indian rice is popular in Cote d’Ivoire. 'It’s costlier growing rice here than getting it imported from outside. The northern and western parts of the country consume rice,' he said. 

Cote d'lvoire, the world's largest cocoa producer and exporter, is keen to explore the Indian market for direct marketing of cocoa and cocoa-based products, and the sector regulator will visit the Asian country next month. Cocoa regulator Le Conseil du Cafe-Cacao not only wants market access in India for cocoa products, but is also looking for investors and partnerships for processing cocoa in Cote d'lvoire.

 

Currently, much of the cocoa produce in Cote d'lvoire -- also known as Ivory Coast located in West Africa -- is marketed through middlemen and third parties, leading to lower returns for farmers.

 

'Until now, our colonisers (France) built a system of dependency on Europe for cocoa trade. But we are open to selling our products to other countries. We are ready to sell directly to Indian manufacturers,' Cocoa regulator Le Conseil di Cafe-Cacao Managing Director Yves Brahima Kone told PTI in an interview.

 

'We are going to India in November and meet potential partners and government leaders to explore direct marketing of cocoa. We will be able to sell cocoa products or semi-finished products,' he said.

 

Asked whether the high duties on the import of cocoa will be a subject of discussion, the regulator said it would be one of the issues slated for discussion.

 

'It is going to be a win-win situation for both sides,' he said.

 

The regulator said the consumption of cocoa products in India is increasing, and that will drive the trade strategy during the discussion with Indian leaders.

 

It is the first time that the cocoa regulator from Cote d'lvoire will be visiting India -- which imports around 1 lakh tonne of cocoa products -- for the promotion of the cocoa trade.

 

At present, Cote d'lvoire is focusing more on processing and transformation of cocoa into products like cocoa powder and cocoa butter, among others, to ensure better returns to the farmers and expand its cocoa economy. It has capped annual domestic production at 2.5 million tonne.

 

'We are promoting processing of the commodity (as value addition will get us more income) before selling it. We are looking for partnerships and setting up processing facilities,' said Colulibaly Siaka Minayaha, Chairman of the Board of Directors of Le Conseil du Cafe-Cacao.

 

He said the country aims to achieve a processing level of 49 per cent in the current year.

 

To encourage the processing of cocoa, the regulator has taken several steps to organise farmers and establish cooperatives of smallholding growers, he added.

 

The regulator also said the country is in the process of complying with European norms on sustainability, deforestation and child labour.

 

International Cocoa Organization (ICCO) Executive Director Michel Arrion said India is an emerging market for the consumption of cocoa, used largely in the manufacturing of chocolates and should become a member of the inter-governmental body.

 

Out of 5 million tonne of global cocoa production, Cote d'lvoire alone produces about 2-2.5 million tonne annually and exports almost the entire quantity, including value-added products like cocoa butter.

 

Cote d'lvoire, located in West Africa, harvests cocoa twice a year, with the first crop picked during October-March, and the second crop in April-September. PTI LUX

 

The PTI journalist is in Abidjan on invitation from the cocoa regulator.

Malaysia's agricultural and food security ministry on Monday said it would provide a subsidy of 950 ringgit ($201.78) per ton for imported white rice in the states of Sabah and Sarawak from Oct. 5.

 

The ministry also asked the Federal Agricultural Marketing Authority to increase distribution of local white rice to rural areas.

 

Malaysia's Agriculture Minister Mohamad Sabu said the subsidy measures were announced to address concerns over higher prices of rice.

 

He also announced a task force had been formed to inspect local rice supply chains.

In this episode of the 'State of the Economy' podcast, Subramanian Ra Mancombu, Head, Agri-biz and Commodities, businessline and CA Aditya Sesh, a member of the expert committee in the Ministry of Agriculture and Farmers Welfare, Government of India discuss the challenges faced by Indian agriculture, including the impact of climate change events over the past few years.

 

Climate change has significantly affected agricultural production in India, particularly in food grains and pulses. India banned wheat exports and curbed rice exports due to these challenges. Prices of pulses have surged in recent months, and abnormal southwest monsoon patterns have added to the woes. The deficiency in monsoon rainfall, while partially addressed by September rains, has still raised concerns.

 

Sesh emphasizes the interconnectedness of all markets, from production to consumer markets, and the need to view them holistically. He discusses the integration of traditional physical mandis with virtual platforms like eNAM and ONDC, transforming Indian agriculture into an industry.

 

Regarding the upcoming crop season, Sesh expresses optimism about wheat production but highlights concerns about pulses, anticipating potential shortages. He also touches on the impact of El Nino on Indian agriculture and the global issues affecting food supply, such as the Ukraine-Russia wheat dispute.

 

The accuracy of crop assessments in India is questioned, with Sesh acknowledging data entry challenges and efforts to improve data quality. He also discusses the use of technology like drones, satellite imagery, and IoT in enhancing data collection and production estimation.

 

The conversation delves into the pricing of agricultural products and measures to ensure affordability while supporting farmers. Sesh emphasizes the shift from food security to nutritional security and the growing demand for pulses and proteins in India.

 

Finally, the discussion expands to the idea of a global agriculture strategy for India, involving agriculture production in other countries. Sesh suggests that India should explore opportunities for agriculture expansion beyond its borders, similar to strategies adopted by China and Saudi Arabia.

 

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups