November 03, 2019

RCEP: Death Knell For Indian Agriculture

Vijoo Krishnan

FAST paced moves are on to conclude the talks on the Regional Comprehensive Economic Partnership (RCEP) and seal an agreement. The BJP regime is seeking to push through it riding roughshod over the rights of the States and throwing to winds the livelihood of millions of people – the peasantry, agricultural workers, working class, dairy farmers, plantation sector and the poor. There have been noises of protest from the Congress Party which was the chief architect of the India-ASEAN Free Trade Agreement (FTA) and numerous other FTAs in the pipeline.  Protest even from within the Sangh Parivar and fellow travellers of BJP-RSS have not deterred the Narendra-Modi led BJP government from pursuing the Mega FTA. Major kisan organisations and trade unions  have come out with a joint statement against RCEP. Further, all major industries in the manufacturing sector like automobile, textiles, engineering goods, electronics etc opposed the RCEP. Kerala legislative assembly has passed a resolution against the FTA.

All India Kisan Sabha and the Left Parties have taken a resolute position against the neoliberal economic policies and trade liberalisation from the very beginning. We had built up a massive resistance against the ASEAN FTA and the Human Wall from one end of Kerala to the other was a historic protest. The disastrous impact of the Indo-Sri Lanka FTA and ASEAN FTA on Indian farmers especially in the plantation sector, in tea and coffee, in spices, rubber, coconut, oilseeds etc are well documented as well as available for reference of the policy makers. What the RCEP is going to do to Indian agriculture is much more dangerous than the ASEAN FTA.


Even as the Congress-led UPA government was negotiating the India-European Union FTA (EU-FTA) one of the prime concerns that was expressed by organisations of farmers, experts and even the largest milk cooperative Amul was regarding the threat of import of milk and milk products, especially skimmed milk powder and butter oil from EU which was witnessing over production or glut and was not being absorbed within the EU market. Massive subsidies in EU for farmers also placed the India small farmers engaging in dairying at a clear disadvantage and unable to compete with them. Dairying is a source of earning additional earnings which complemented the meagre incomes from cultivation and the distressed farmer could eke out a living. Milk, as farmers in Rajasthan, point out is their ATM which provides them money for their daily expenses while income if at all from crops is seasonal. In India, small and marginal peasants owning less than a hectare account for 48.4 per cent of land owners. While they own merely 25 per cent of land, they own about 50 per cent of the cattle. About 10 crore farmers in India, mostly poor and marginal and a majority of them women are engaged in dairying. It is also of crucial importance to small and marginal farmers as well as landless poor and a significant source of income for millions. Since the Operation Flood was launched in 1970, it transformed India from a milk deficient country to the largest producer of milk in the world surpassing the USA. In 30 years, it doubled per capita availability of milk and dairy farming emerged as India’s largest self-sustainable rural employment generator. India’s milk production in 2018-19 stood at 187.75 million tonnes which was higher than paddy (174.63 million tonnes) or wheat (102.19 million tonnes) and even the value of milk output at an average farm-gate rate of Rs 30 per kg exceeds the value of both paddy and wheat output put-together at their minimum support price and is rightly termed the country’s largest “crop” (Indian Express, 31 October, 2019). As per the Niti Aayog, India’s milk production is likely to grow to 330 million tonnes by 2033, from the current about 180 MT, while the projected demand is only 292 MT. India will have sufficient surplus to meet its own requirement and will not need to import milk products even after a decade.

The RCEP would allow the dairy industry of Australia and New Zealand to compete with our resource-strapped, crisis-stricken farmers. Both these countries are eyeing the huge market in India to rake in profits. It is notable that New Zealand exported 93.4 per cent of its milk powder, 94.5 per cent of its butter and 83.6 per cent of its cheese production. Removal of tariffs which at present are 60 per cent for milk powder and 40 per cent for fats will allow dumping of these products from these two countries. Needless to say that would lead to the collapse of the domestic dairy sector as well as rob the dairy farmers of their livelihood. In the absence of exclusion of dairy the gains of the Operation Flood and White Revolution will be destroyed by the stroke of Narendra Modi’s pen on November 4, 2019 when the RCEP agreement is slated to be signed. That would be despite Amul and National Dairy Development Board calling for keeping dairy products outside the RCEP.

Dairy sector is only the tip of the ice-berg. Vast sections outside this including in plantation sector, horticulture, sericulture, floriculture, seed industry, pharmaceuticals, small and medium industries, fisheries are all also having the sword of Damocles hanging in store for them. 



Vast areas in Kerala, Karnataka, Tamil Nadu, North Eastern states have millions of farmers and labourers engaged in the highly labour-intensive plantation sector. It is estimated that about 20 lakh hectares in India are under plantation crops. Oilseeds are cultivated in about 25 million hectares in addition to about 21 lakh hectares under coconut cultivation. Farmers cultivating groundnut, oil-palm, mustard, sunflower, soya bean etc will also be affected adversely and past experience of groundnut and coconut farmers seeing fall in demand due to import of cheaper palm-oil is before us.

The plantation sector in India, especially Kerala faced the worst impact of FTAs starting from the time of the Indo-Sri Lanka Free Trade Agreement (ISFTA) signed in December, 1998 and coming into force from March 2000. Plantation crops like tea, pepper, nutmeg, coffee, rubber, cardamom, coconut etc were badly hit and incidence of farmers in distress committing suicide started rising. The removal of quantitative restrictions in April 2001 under the World Trade Organisation regime further exposed these crops to international competition. The then Congress government despite the experience of these policies being detrimental to the farmers went ahead with the ASEAN FTA in 2009 with the opposition BJP also in tow. This opened up the Indian market to cheaper plantation crops, spices and oilseeds from countries like Indonesia, Vietnam, Malaysia, Thailand etc. Protests by the Kisan Sabha and Left parties were mocked at by the ruling Congress and the BJP at that time.

The ASEAN FTA reduced import duties for tea, coffee and pepper while natural rubber, cardamom and few tariff lines on coffee were kept under exclusion list. The current import tariff for ASEAN countries is 50 per cent for tea and coffee (100 per cent under WTO for other countries) and 51 per cent for pepper (70 per cent under WT0). Among the five plantation commodities, natural rubber and pepper have an overall trade deficit, irrespective of RCEP. Losses to rubber farmers due to large scale imports of natural rubber as industrial raw material at lower bound duty of 25 per cent in spite of it being under the exclusion list of ASEAN FTA led to drastic crash in prices and it is estimated that rubber farmers were losing around Rs 5000 crores annually. Trade deficit of pepper during 2018-19 with RCEP countries was Rs 415.31 crores. Farmers have been repeatedly complaining of inferior Vietnamese pepper coming through Nepal or Sri Lanka leading to fall in prices. India exports more than 75 per cent of the coffee produced mostly by small farmers and planters. India has an overall trade surplus of Rs 4763.4 crores but with RCEP countries the trade deficit is Rs 164.35 crores, which implies that Indian farmers and planters will be adversely affected. Fears that tea from China, the largest tea producer could be routed through any ASEAN country having a duty advantage are also not unfounded. China is in an advantageous position to meet global demand and with duty advantage Indian market will be targeted especially putting into peril the small tea growers.

Trade deficit in the plantation commodities with the RCEP countries in 2018-19 is reported to be Rs 5,716.64 crores. This indicates the amount by which the cost of India's import of plantation commodities from RCEP countries exceeds the value of its exports to those countries. This trade deficit will drastically worsen if the proposed reduction in tariff of plantation commodities materialises. This is in a scenario wherein the farmers are already in a crisis and finding cultivation unviable due to high costs and low returns.

, plantation crops in India will be adversely affected and the presence of China, Australia, New Zealand and Japan in RCEP will also affect the sericulture, horticulture as well as floriculture sector in India. Already the deleterious impact of reduction in import duty of raw silk has put sericulture in India, especially Karnataka into an irretrievable crisis as there is dumping of cheap raw silk from China which produces about 90 per cent of the silk produced in the world. States like Himachal Pradesh, Uttarakhand, the Kashmir Valley and many other regions engaged in horticulture crops will also be adversely affected. Australia is also a major producer of wheat and chana. With large swathes of land and huge herds of livestock that they have, they can sell their produce at smaller margins than poor peasants in India can.

In times of falling incomes, job losses, high unemployment and the recession, India is replete with concrete evidence of fall in sales of commodities ranging from Parle-G biscuits and innerwear to automobiles. Companies are either closing shop or resorting to retrenchment of workers. In the light of huge trade deficit with major RCEP countries,  there is no doubt that joining of RCEP would be disastrous for the social and economic well being of people of India.  The BJP government led by Narendra Modi must explain, when these conditions have led to falling purchasing power, who is going to be the beneficiary of RCEP. It should also explain how RCEP is going to spur employment generation by allowing for duty free imports of plantation commodities, agricultural produce, dairy products, marine-products, manufactured goods including pharmaceuticals. The BJP government should remove the shroud of secrecy and table the negotiating text in the parliament before going ahead with the ratification.  The government of India should seek the opinion of states rather than go ahead  and sign/ratify the Mega FTA unilaterally.  It has to place on table the benefits that will accrue to Indian peasantry, workers and consumers if any. Its failure to do so, the experience of earlier FTAs and the clandestine nature of the negotiations are valid reason to conclude that RCEP is bound to be injurious to the health of farmers and workers in India. Peoples’ resistance will be built against RCEP. It shall be fought tooth and nail by building broad unity of the peasants and workers as well as all people who stand for trade justice.