Ankush at large

Drug decision could savage India-EU food free trade agreement

By Ankush Chibber

- Last updated on GMT

Related tags Free trade agreement Dairy products Eu Milk

Drug decision could savage India-EU food free trade agreement
I don’t think that there was any more talked about corporate news in India this week than the Supreme Court’s decision to dismiss Novartis’s appeal for a patent for its Gilvec cancer drug. 

The ruling is now being seen as a blow to Big Pharma and a win for patients and Indian generic drug makers who dominate the developing markets in medicine. 

What the decision has also done is put the spotlight back on the EU-India Free Trade Agreement, with some key clauses on intellectual property getting a fresh going over. Needless to say that a great deal will happen between now and the day the FTA is signed. 

Those criticising the apex court’s decision, the majority of whom are to the west of the Nile, are seeing this as an act of protectionism by India—of protecting its own burgeoning generic drugs industry. 

And this stigma of protectionism has the ability to puncture other industries that both sides are equally strong in. 

For example, dairy. 

Everyone knows that India is the world’s biggest producer of milk. At the same time, the EU as a whole is the world’s largest milk-producing bloc. On the other hand, the EU is also the world’s biggest consumer of milk followed by… you guessed it… India. 

The only difference is the way the milk is flowing. While India’s hunger for milk is only growing exponentially, the EU’s demand has largely tabled off. Also, dairy products in the EU are heavily subsidised, which means they can be relevant in India’s low-price environment. It thus makes it understandable why the EU’s dairy industry wants to tap the world’s fastest growing market—something that the FTA makes possible.

But therein lies the catch.

Current EU regulations bar it from importing any dairy products from India because it considers the rearing of milch animals in India not up to its own standards. That means if the gates open, there is only one way the milk would flow. But that is only if India’s farmer-led industry will allow it.

And this is probably not going to happen. Dairy organisations like Amul, which enjoy considerable political clout, will not let EU products in without something in return. 

It must be noted here that the EU has a considerably large Indian and South Asian diaspora. So this access is vital in market and revenue terms and not just in its symbolism. We are now hearing that Amul is already asking the government to keep its farmers’ interests in sight when negotiating the FTA. 

On the other hand, the EU also wants protection for many of its dairy products. For example, it wants geographical indication protection for many of its cheese varieties, even though it is not ready to offer any protection for Indian products like paneer. 

It is not inconceivable that Muller, for example, will start producing salted lassi or chaas if it gains access to the market. It’s worth remembering that the EU has not implemented protection for other Indian claims like Ayurvedic medicine. 

For the EU and the west in general, the drug decision has set an example of what it can expect from India when it comes to protection of their intellectual property, even if you keep the merits of such thoughts aside. Would they then relax their protection demands in food and beverage? That seems highly unlikely. 

As unlikely as India relenting either. The country has always protected its primary producers and consumers, especially from the lower income segments. 

Protection for the EU’s dairy products would mean that in the long run, the Indian makers would suffer from not being able to compete on the same terms and consumers would have to contend with higher prices. 

Brace yourself, ladies and gentlemen. The two sides are just getting started. 

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