Indians Are Not yet Willing To Pay For Premium Organic Food, ICRIER Study
According to a knowledge report by Indian council for research on International Economic Relations (ICRIER), ‘India has lower organic imports than exports’. There are various reasons sighted for this, first, Food Safety and Standards Authority of India (FSSAI) does not have a proper guideline for organic products imports. This makes organic imports often imported in India as conventional products. There is uncertainty in India, related to labelling and standard of the products.
The other big reason is the psychology of western countries, where Indian organic products are imported easily, but for certain reasons, they (nations like the UK) do not incentivise organic imports to India. This is due to the fact that such nations perceive less demand and small market size of organic products in India. However, now the scenario is changing and it is perceived that market size of India is growing and demand for organic products in India is growing accordingly.
There is no more unilateral market trade agreement with India and as far as the European Union is concerned, it is now engaging in a bilateral market trade with EU nations supporting their exporters to export to India. Another point is that organic trade board in the UK has received EU funding of USD 11.5 million along with Denmark to promote organic business in the UK along with developing nations like India.
In the report, a sample size of few companies was taken which are involved in the import of organic food products in India. Among the sample, only six companies are engaged in imports of which three are specifically in tea imports. Only one Tea Company is engaged in imports of ingredients from China and Vietnam due to good quality. Other companies were involved in imports of juice concentrates from the US, olive oil from Italy and organic herbs from various other nations.
The report also specifies that a number of companies are trying to sell products like herbal infused tea and products like vegan chocolates in India through established retail chains like Godrej Natures basket and Hyper City retails as well as online retailers. Most of such companies still find that Indian organic market is still at a nascent stage and Indian consumers are less willing to pay for premium products vegan chocolates. According to these exporters, the Indian market has to be more mature to penetrate in it.
Scope for establishing manufacturing bases in India is a question and companies pointed out the barriers that inhibit imports which restrict them to do it in India.
Two of the sample companies (involved in fresh fruits and vegetable business) also pointed out that although they are not importing now, they would soon start importing from neighbouring nations like Bhutan, Myanmar and Nepal. The issue they are facing while sourcing from Bhutan is that there is no third party certified farmer. Hence products sourced from them cannot be used for further manufacturing and exports. Most of such importers are looking at FSSAI for policy improvements that will translate into hassle-free imports.
