India and ASEAN free trade agreement: an impact assessment on coffee product

Abstract

Plantation products are not a major item of India’s export basket; it is the source of livelihood for millions of small and marginal farmers and provides employment for millions of plantation workers. The plantation sector of India is also exposed to heightened international competition. In an open economy, competitiveness of a product is not only from export point of view, it equally important to survive in the domestic market as well. In this respect the present study focus on plantation sector, particularly Coffee product. There is a strong apprehension among a section of stakeholders on the possibility of large-scale import of plantation crops from ASEAN due to India-ASEAN FTA. The study tries to seek answer to the questions such as, Can India re-export by importing low priced coffee from ASEAN? It follows from the discussion that, due to growing domestic demand and new low cost producing and exporting country like Vietnam and increasing ASEAN countries performance in exporting value added products in the international market. India is losing export competitiveness in the international market. Over the years, India’s dependency on import and domestic market of coffee has been increasing. This product is increasingly becoming domestic oriented. India’s trade integration with ASEAN created for concern for coffee product. In case of coffee, there is high concern, as Vietnam coffee competes with domestically produced coffee and India’s import dependency on Vietnam for this product is high and it is on rise. In the international market India is competing with Vietnam and Brazil. India has the opportunity in exporting value added coffee in the international market, especially in ASEAN market. In the initial stage, support by the government is very important to push Indian exporters in global value added supply chain. The value addition in supply chain is important for the sustainability of the plantation sector of India. In this respect, state initiation is important so that Indian value added plantation product such as coffee can access the ASEAN and other developed countries market. The plantation products of India are constrained by logistic problems, there by experiencing higher transaction cost affecting the export competitiveness. Government need to intervene in a large scale to address such issue. So that Indian plantation sector can become globally competitive.