India-EU trade deal excludes rice; agreement on geographical indications pending

The India-EU trade deal has excluded rice from liberalization due to its sensitivity to the EU domestic market on food and health safety concerns, while negotiations on geographical indications are ongoing, the European Commission said in a statement Jan. 27.

Indian rice exporters have said the trade deal and the pending GI agreement with the EU are unlikely to affect existing trade dynamics and exports.

"Sensitive European agricultural sectors will be fully protected, as products such as beef, chicken meat, rice and sugar are excluded from liberalisation in the agreement," the EC said.

"All Indian imports will continue to have to respect the EU's strict health and food safety rules."

The agreement was signed Jan. 27 after negotiations since 2007.

"Over 99% of Indian exports gain preferential entry into the EU, unlocking massive growth potential," India's Ministry of Commerce & Industry said in statement Jan. 27.

The EU levies about Eur200/metric ton duty on milled rice, Eur30/mt on non-basmati brown rice, while no import duty exists for basmati brown (husked) rice, which incentivizes the import of brown basmati rice into European markets from India and Pakistan.

"Front and centre to these negotiations was maximizing new opportunities for our unmatched European products, while protecting European farmers," Christophe Hansen, Commissioner for Agriculture and Food, said.

"That is why the tariffs on the most sensitive products such as beef, sugar, ethanol, rice and poultry will remain in place."

"As in any trade agreement, our high food safety standards are fully maintained," Hansen added. "The safety of EU consumers is non-negotiable."

A separate GI agreement is being negotiated. India is pursuing a GI tag for basmati rice with the EU, seeking exclusive rights to define the grain as originating from specific Indian regions. At the same time, the EU is looking to increase its agricultural exports to India.

"In parallel, the EU and India are currently negotiating a separate agreement on Geographical Indications (GIs), which will help traditional iconic EU farming products sell more in India, by removing unfair competition in the form of imitations," the EC statement said.

Potential TRQs on rice imports

The EU is mulling a tariff rate quota system to curb the surge in rice imports, with the planned introduction of automatic safeguard mechanisms from January 2027.

"A specific automatic safeguard mechanism for rice imports has been introduced, using a tariff rate quota system. Under this mechanism, in the event of a significant surge of rice imports above historical average imports to the EU, these imports will be subject to MFN (most favoured nation) tariffs for a specific period to prevent serious disturbances to the EU rice market," the European Council had said in a statement Dec. 1.

"The agreement includes provisions for reintroducing duties in case of sudden and significant rises in imports from a beneficiary country to protect Union producers," the statement said, adding that the legislation will come into effect from Jan. 1, 2027.

Platts, part of S&P Global Energy, assessed 1509 steamed basmati rice at $841/mt FOB Jan. 23, $4/mt down week over week, while 1121 steamed basmati rice was assessed at $973/mt FOB, unchanged week over week.

Minimal short-term impact

"In the past, issues have come up in terms of quality and rejection for India rice exports to the EU," a Karnataka-based exporter said.

"The EU market has fixed suppliers from India and buyers usually prefer those only as it's not a price-sensitive destination. Thus, the Indian rice market will have minimal disruption."

"The market is stable right now. GI negotiation is going on but no concrete decision yet. However, that hasn't led to any changes in buyers' interest," a Madhya Pradesh-based exporter said.