Agri Business

How EU could grant exclusive GI tag for Indian Basmati rice

Subramani Ra Mancombu Chennai | Updated on May 18, 2021

Could seek market access for its wines and spirits in return; both parties leave ample scope for further talks

India has given itself an opportunity to protect the Geographical Indication (GI) tag for Basmati rice in the European Union (EU) after the EU-Indian officials summit on May 8 through a video conference.

Soon after the summit, an EU-India joint statement was issued in which paragraph 23 is a clear indication of India having set the tone to get the GI tag for Basmati or at least get concessions in marketing the long-grain rice in the EU, according to trade analysts.

Paragraph 23 of the joint statement said: “We recognised our mutual interest in protecting geographical indications. In this regard, we underlined the benefits of a balanced bilateral agreement on the protection of geographical indications. We look forward to the early conclusion of the Memorandum of Understanding between the EU Intellectual Property Office and Department of Promotion of Industry and Internal Trade.”

Both the sides have also left themselves ample scope to negotiate the issue of GI tag for Basmati rice as well as EU demand for market access to its products in the joint text. These issues are expected to be followed up and carried forward in subsequent interactions, negotiations and talks.

India and EU said in para 17 of the joint statement that: “.... We agreed that in order to create the required positive dynamic for negotiations, it is imperative to find solutions to long-standing market access issues. We also agreed to the launch of negotiations on a stand-alone investment protection agreement. We also agreed to start negotiations on a separate agreement on geographical indications which could be concluded separately or integrated into the trade agreement, depending on the pace of negotiations.:

This is seen as an indication where India could seek GI tag for its Basmati rice, besides exclusive marketing rights for Alphonso mangoes and Darjeeling tea and a few other products such as handicrafts and textiles in return for considering EU demand for market access to its wines and spirits.

Basmati exports vital

Basmati exports is key for India as it contributed $4.06 million (₹29,849 crore) during the last fiscal. Its per unit value at $868 (₹63,575) per tonne was more than double that of non-Basmati rice whose value was $366 (₹26,800).

The issue over the GI tag for Basmati in the EU is that Pakistan has also laid claim to it. India registered for the GI tag in August last year and Pakistan filed a counter in December last year.

As per EU regulations, both nations had six months time till May 8 to negotiate the issue but the deadline expired without any progress. During the same time, the India-EU summit was held, raising hopes of a political settlement.

Indian authorities believe that Basmati exports to the EU could double from the current $250 million (Rs 1,831 crore). Last fiscal, the EU imported nearly 2.88 lakh tonnes of Basmati rice compared with 2.11 lakh tonnes the previous one.

It is over here that trade experts and analysts feel that India can hope to get a fair deal by placing Basmati on the table and agreeing to look into the EU demand for market access to its wine and spirits.

Trade experts say that the GI negotiations are all about trade and culture. EU interests are that it wants GI registration for 121 of its products, lower duty for spirits and wines currently attracting a basic Customs duty of 150 per cent, providing additional access for other products and extra protection for its GI products under Article 23 of Trade Related Aspects of Intellectual Property Rights (TRIPS).

For India, Basmati GI tag is crucial as it forms an important part of its food products. Apart from this, it can look to get special status for its Alphonso mangoes and Darjeeling tea.

“The problem with providing access to European wine and spirits is that the Indian liquor market is highly established one with annual sales of ₹1.6-lakh crore. Of this, South India alone makes up 52-53 per cent. A limited amount of foreign liquor is consumed in the country,” said S Chandrasekaran, a Delhi-based trade analyst.

Of the total liquor market, wines make up only ₹1,000 crore.

Bilateral arrangements

In these circumstances, India will have to negotiate skilfully to get exclusive access for its Basmati rice, besides Alphonso mango and Darjeeling tea.

“There are two angles to this. One, the EU wants access to an established (liquor) market in India. In return, India will get access to a market that has to first get a taste of Indian products and then be developed. Second, India has to carefully plan its market and negotiate,” said Chandrasekaran.

According to analysts, the EU has been signing bilateral treaties with quite a few countries for over a decade now, particularly to protect its interest in wine and spirits.

Accordingly, it has signed bilateral agreements with Chile, South Africa and China agreeing to provide GI tags to the products of these countries in return for access to its wine and spirits.

“Wine and spirits are very important to the EU’s economy and exports. The EU has signed bilateral agreements mainly to manage the competition in wine and spirits. Its agreement with China has helped it to establish a market for its wine and spirits,” said Chandasekharan.

China imports $2.91 billion (₹21,312 crore) worth wines and spirits from the EU and has quite a good market for these in the Communist country. In 2019, EU’s wine exports were worth $26.7 billion (₹1.95-lakh crore) making up nearly 74 per cent of the total wine exports globally.

According to the trade analyst, the EU GI products market size was worth $65.5 billion (₹4.80-lakh crore) in 2012 with wine and spirits making up 71 per cent of it.

Sino-EU deal

EU officials have been smart in taking decisions quickly, particularly with regard to the Sino-EU deal. With climate change resulting in changes within China, there are possibilities of Tibet or western part of the dragon nation starting Vitiviniculture.

The EU perceived the threat from such a development and acted fast enough to sign the deal. In return, it gives protection to Chinese products, according to analysts.

The GI issue assumes importance for EU and India as the former’s application for GI registration of the 121 products has been pending since 2011. So far, no progress has been made with 92 of the registrations being sought for wines and spirits. The rest are for food products.

India has given registration to 11 GI products of the EU with seven of them including Champagne belonging to the wine and spirits category and are of major interest to the EU.

“Wine and spirits are part of the EU culture. At the same time, India is looking for access to its food products, textiles and handicrafts. India’s rural development will get a leg up if its officials negotiate these aspects carefully,” said Chandrasekharan.

India would have to try and wrest an equivalent market access for Basmati in the event of yielding any ground to EU wines, said Chandrasekharan. “India, probably, will have to approach the issue as EU wines versus Indian food and textiles,” he said.

For the EU, the wines and spirits market is crucial since it is intrinsically linked with its politics. Essentially, it has also led to a north versus south divide in the union.

The wine and spirits products are exported from countries such as Greece, Italy, Spain and France which represent south Europe’s interests and they make up 50 per cent of the market share.

The Indo-EU summit statement gives ample space for India to seek access not only for Basmati rice, Alphonso mangoes and Darjeeling tea but also earn back the access it lost with the termination of the multi-fibre agreement in textiles, say experts.

Published on May 17, 2021

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