EU ‘outpaced’ in Indian food and drink market - FoodDrinkEurope

The EU segment, which is currently worth only €236m per year, has dropped from 5% in 2005 to 3% in 2010 – a trend commonly seen in emerging markets as India, Brazil and Russia, the FoodDrinkEurope 2011 summary said.

EU exports to India are much higher than they were 10 years ago – increasing 241% between 2001 and 2010 - however there is insufficient market access to prevent the EU share shrinking, the report said.

The establishment of a free trade agreement (FTA) between the EU and India is essential if it is to establish a better foothold in the processed food market, the summary said.

Positive picture for processed foods​

However, when considering only value-added process foods, the overall picture looks slightly more positive for the EU.

“The top exporters in India are still focussed more on trade in less elaborated products,”​ FoodDrinkEurope economic affairs manager Kinga Malinowska told FoodProductionDaily.com.

“In 2012, the European processed food and drink products, including for instance alcoholic beverages, confectionary, food preparations, cheeses and processed meat products, accounted to almost 42% of all highly processed food and drink products imported by India.”​

“This was also 1.6% percentage points higher than a year before, which means that, even if very modest, the EU registers some growth for its exports of processed products to India,” ​Malinowska said.

Export rankings drop​

Europe dropped from fourth to sixth position in the ranking of important suppliers of the Indian food and drink market between 2006 and 2010, with exports from Ukraine, Brazil and Indonesia outperforming the EU.

“Food exports from Ukraine, Brazil and Indonesia grew much faster and outpaced the growth of EU exports to this country, with skyrocketing exports from Ukraine and almost fourfold growth registered by Brazil, against 161% increase witnessed by the EU,” ​Malinowska added.​

“The EU share of food and drink imports in BRIC countries evolves in a quite similar way.”​

“China is, however, an exception, as the EU share of this market did not witness any important reduction in the past few years and more recently has been growing.”​

Free trade agreement​

Despite this, the report adds that EU growth in the emerging Indian market should be much higher to match the increasing demand.

The establishment of a free trade agreement (FTA) and the abolition of existing Indian import barriers such as high tariffs, sanitary measures diverging from international standards and tax discrimination are necessary if the EU is to establish itself in the Indian food and drink market.

FoodDrinkEurope remain hopeful and have urged the European Commission (EC) to secure a free trade agreement at an EU-India summit in February 2012.

“Considering geographical advantage of some of our competitors, their production potential and bilateral preferential arrangements, without an FTA, the EU may continue losing ground on the Indian market or at least will not fully benefit from the growing demand for high value-added products,” ​concluded Malinowska.