India-EU Trade Deal Talks: Can Food Safety Standards Derail a Historic Agreement?
- Dr.Sanjaykumar Pawar
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Table of Contents
- Introduction
- Why the India-EU FTA Matters
- Sanitary and Phytosanitary Measures (SPS): The Core Friction
- The Aflatoxin Dispute: What’s at Stake?
- Comparing Global Standards: EU vs Codex vs USA
- Trade in Goods: Rules of Origin and Market Access
- India’s Agricultural Export Profile: Opportunities and Bottlenecks
- The Path Forward: Negotiation or Concession?
- Conclusion
- FAQs
1. Introduction
After more than a decade of back-and-forth, the India-EU Free Trade Agreement (FTA) is finally gaining momentum. Touted as a potential game-changer for both economies, the deal aims to unlock a powerful bilateral trade relationship, opening access to one of the world's largest and most premium markets.
But just as the talks enter their most crucial phase, a major roadblock has emerged—food safety standards, officially termed Sanitary and Phytosanitary (SPS) Measures.
A recent EU report, following the 12th round of negotiations, revealed that "intense work still needed" to resolve key disagreements, particularly around agricultural imports. While India wants fairer access for its agri-products like rice, spices, and peanuts, the EU insists on strict pesticide and toxin limits—some tougher than even global Codex or WHO norms.
For Indian farmers, exporters, and food processors, this isn’t just a policy issue—it’s personal. These standards have already led to hundreds of rejected shipments, costing millions in losses. With billions in trade and rural livelihoods at stake, the question is clear: Can diplomacy balance safety and fairness before the year-end FTA deadline?
2. Why the India-EU FTA Matters
The India-EU Free Trade Agreement (FTA) isn’t just another economic document—it’s a strategic bridge between two of the world’s largest democratic economies. In 2024–25, the European Union emerged as India’s third-largest trading partner, with exports worth over $77 billion, accounting for more than 11% of India’s total outbound trade, as per the Ministry of Commerce and Industry.
A well-negotiated FTA could be transformative. It would not only cut tariffs on everything from machinery to mangoes but also open premium markets for Indian services, startups, and skilled professionals. Enhanced regulatory cooperation could simplify compliance and reduce red tape for businesses on both sides. It also paves the way for smoother investment flows, technology exchange, and stronger intellectual property protection.
However, not all sectors are cruising at the same speed. While trade in automobiles, pharmaceuticals, and IT services shows promise, agriculture remains a thorny issue—largely due to strict EU food safety rules. Given that agriculture sustains over 50% of India’s workforce, finding balance here is essential. The FTA is not just about trade—it’s about people, policy, and potential.
3. Sanitary and Phytosanitary Measures (SPS): The Core Friction
At the heart of the India-EU Free Trade Agreement deadlock lies a highly technical but deeply impactful issue: Sanitary and Phytosanitary (SPS) Measures. Under World Trade Organization (WTO) norms, these are policies meant to ensure that imported food is safe for human and animal health. While the goal is legitimate, the way these rules are applied—especially by the European Union—has become a major hurdle.
🔍 What SPS Measures Cover:
- Pesticide residue limits
- Toxins like aflatoxins (commonly found in nuts and spices)
- Microbial safety standards
- Animal quarantine rules
- Plant disease control mechanisms
🚫 Why India is Concerned:
India believes the EU’s SPS standards are overly stringent—in many cases, stricter than Codex Alimentarius, the international food safety benchmark set by the WHO and FAO. For Indian exporters, these rules act as non-tariff barriers (NTBs), making it hard to send products like:
- Peanuts
- Chillies
- Basmati rice
- Tea and spices
These items are among India’s top agricultural exports, yet face frequent shipment rejections and high compliance costs in Europe.
Rejected Indian Agri Shipments in EU (2023)
📊 Source: DGFT, EIC, EU RASFF
- Peanuts – 57 shipments
- Spices (Chilli, Turmeric) – 43
- Basmati Rice – 18
- Fresh Mango – 12
📊 The Trade Impact:
India’s agri-exports to the EU rose only modestly from $3.02 billion in FY2019 to $4.54 billion in FY2025, despite rising demand. This slow growth clearly signals that regulatory bottlenecks—not quality or capacity—are limiting India’s market potential.
In a globalized world, trade rules must protect health—but they must also be science-based, transparent, and fair. For India and the EU to build a truly balanced FTA, resolving SPS friction is not optional—it’s fundamental.
4. The Aflatoxin Dispute: What’s at Stake?
Among the many hurdles in the India-EU trade deal negotiations, aflatoxins have emerged as a particularly sticky issue. Aflatoxins are toxic substances produced by certain fungi that grow on crops like peanuts, maize, chillies, and tree nuts, especially in hot and humid climates—conditions common across India.
⚠️ What’s the Issue?
The European Union imposes extremely strict limits on aflatoxin levels—tighter than both WHO Codex and U.S. standards. For example:
- Peanuts (for direct consumption)
- EU: 2 µg/kg B1; 4 µg/kg total
- WHO Codex: 15 µg/kg total
- Spices (like chillies)
- EU: 5 µg/kg B1; 10 µg/kg total
- USA: 20 µg/kg total
🇮🇳 India’s Standpoint:
India argues that the EU’s aflatoxin thresholds are not just strict—they are unreasonably restrictive. Meeting these levels requires advanced processing, rigorous testing, and frequent shipment recalls, pushing up costs and discouraging small exporters.
According to DGFT data, more than 140 Indian agricultural consignments were rejected by EU ports in 2023 due to aflatoxin violations. That translates to millions in lost revenue and reputational damage for Indian exporters—particularly for high-demand products like chillies and peanuts.
🌍 The Bigger Picture:
India already aligns with Codex standards—accepted globally. So the question remains: Are EU norms more about food safety or market protection?
For the India-EU FTA to succeed, both sides need to balance public health concerns with fair trade practices. Without that, aflatoxin limits could become a deal-breaker in an otherwise transformative agreement.
5. Comparing Global Standards: EU vs Codex vs USA
| Product | EU Limit (µg/kg) | Codex (WHO) | USA Limit |
|---|---|---|---|
| Peanuts (Direct Use) | B1: 2, Total: 4 | Total: 15 | Total: 20 |
| Spices | B1: 5, Total: 10 | No fixed limit | Total: 20 |
| Rice | B1: 5 | Total: 15 | Total: 20 |
One of the key points of contention in the India-EU trade talks lies in how food safety limits are defined across global markets—especially for toxins like aflatoxins.
India highlights a major inconsistency: while it already complies with Codex Alimentarius (set by the WHO/FAO) and U.S. regulations, the European Union imposes far stricter thresholds, particularly on products like peanuts, rice, and spices.
For a fair and balanced India-EU FTA, scientific consensus—not unilateral enforcement—must guide food safety norms.
6. Trade in Goods: Rules of Origin and Market Access
While debates over food safety dominate headlines, the India-EU Free Trade Agreement (FTA) also hinges on several complex but crucial trade elements—especially those tied to market access and product origin.
🔄 What Are Rules of Origin (RoO)?
Rules of Origin define the “nationality” of a product and determine whether it qualifies for preferential tariffs under the FTA. For instance, if a product uses materials from multiple countries, RoO guidelines assess if enough processing occurred in India to earn tariff-free entry into the EU.
📦 Product-Specific Rules:
Negotiations are also focused on product-specific rules for:
- Agricultural and processed foods
- Fisheries and marine products
- Chemicals and petroleum
- Machinery, electronics, medical devices
- Railway equipment, aircraft, and ships
Each category involves unique compliance conditions and origin definitions, which exporters must understand to benefit from tariff reductions.
📉 Tariff Trade-Offs:
- India’s Ask: Lower EU tariffs on agri-food products, textiles, and leather goods.
- EU’s Ask: Lower Indian duties on automobiles, alcoholic beverages (like wine and spirits), and dairy products—all of which are politically sensitive sectors in India.
🔍 The Road Ahead:
A recent EU report noted that “market access discussions continued in detail”, signaling progress but also highlighting unresolved trade-offs. Both sides are clearly trying to find a middle ground, but compromises on sensitive goods will require strategic balancing.
For the FTA to be truly transformative, negotiators must align RoO protocols, tariff schedules, and sectoral priorities—ensuring gains for both industry and consumers across borders.
7. India’s Agricultural Export Profile: Opportunities and Bottlenecks
India is proudly the second-largest food producer in the world, yet its share in high-value global agricultural trade remains surprisingly modest. The reason? While the country grows everything from Basmati rice to turmeric, the journey from farm to international market shelves is far from seamless.
✅ Opportunities India Can’t Afford to Miss:
- Growing demand in Europe for organic rice, Basmati, and ancient grains gives India a strong edge.
- A global shift toward plant-based diets creates new markets for lentils, pulses, and vegan protein sources.
- Many Indian crops are climate-resilient, making them ideal for niche, eco-conscious European consumers.
India has the goods. What’s missing is the bridge to global premium markets.
❌ Bottlenecks Holding Back Growth:
- Fragmented supply chains and smallholder farms make quality control difficult.
- Inadequate cold storage, logistics, and testing labs lead to spoilage and rejections.
- A shortage of EU-compliant processing facilities makes it tough to meet SPS standards.
- India still lacks a national standard aligned with the EU’s SPS regulations, which increases rejection risks.
According to an ICRIER study, adapting fully to EU food safety norms could cost Indian exporters a whopping ₹3,500 crore annually in upgrades and certifications.
Compliance Cost Estimate
- Testing & Certification: ₹1,200 Cr
- Cold Chain Modernization: ₹1,000 Cr
Traceability & Labeling: ₹500 Cr
- Training & Audits: ₹800 Cr
- 🧾 Total: ₹3,500 Cr/year
In short, India has the raw potential to be a global agri-export powerhouse. But unless infrastructure, compliance, and standardization catch up with opportunity, the India-EU FTA may remain under-leveraged for farmers and food businesses alike.
8. The Path Forward: Negotiation or Concession?
As India and the EU inch closer to a landmark trade agreement, the path ahead demands not just diplomacy—but smart, science-based solutions. The Sanitary and Phytosanitary (SPS) dispute, especially around food safety, can't be solved with a one-size-fits-all approach. It calls for collaboration over confrontation.
Here’s how both sides can move forward—without sacrificing public health or trade ambitions:
✅ 1. Mutual Recognition Agreements (MRAs)
If the EU and India mutually recognize each other's food certification systems, exporters could avoid redundant inspections and delays. Trust-based frameworks already exist in other global FTAs.
✅ 2. Capacity Building in India
The EU can help fund modern testing labs, training programs, and tech transfer in India—much like the WTO’s STDF initiative. This would empower Indian exporters to meet global standards without crushing compliance costs.
✅ 3. Scientific Risk Assessment Dialogues
Instead of default rejections, a joint India-EU task force could evaluate food safety risks case by case—creating space for science over subjectivity.
✅ 4. Phased Harmonization of Standards
India could gradually align its Maximum Residue Limits (MRLs) with EU norms. In return, the EU could offer interim market access, ensuring Indian exports aren't locked out during the transition.
💬 “Trade should not be held hostage to safety politics,” says Dr. Arpita Mukherjee (ICRIER). “There is room for compromise if transparency and science drive the negotiations.”
Striking a balance between fair trade and food safety is difficult—but not impossible. With the right mix of policy flexibility and mutual respect, this FTA can set a new global benchmark for inclusive trade.
9. Conclusion
The India-EU Free Trade Agreement (FTA) is more than a strategic trade pact—it’s a test of whether a developing economy like India can gain equitable access to advanced markets without being hindered by overly rigid, often protectionist regulations.
At its core, the ongoing disagreement over Sanitary and Phytosanitary (SPS) Measures isn’t just about aflatoxins or pesticide limits. It reflects a deeper challenge: how do you balance public health with trade fairness?
🇮🇳 What India Needs to Do:
- Invest in modern food safety infrastructure
- Standardize testing, packaging, and processing across agri-export chains
- Strengthen compliance with global norms like Codex
🇪🇺 What the EU Must Consider:
- Avoid arbitrary or excessively stringent standards that act as trade barriers
- Recognize India’s climatic and agricultural realities in setting import rules
- Engage in science-based dialogues, not blanket rejections
If both sides choose cooperation over confrontation, the FTA can serve as a model for global trade diplomacy—where food safety, fairness, and economic opportunity go hand in hand.
💡 This agreement isn’t just about tariffs—it’s about reshaping the rules of international trade for the modern age.
🚨 With the clock ticking toward the year-end deadline, the next few negotiation rounds will be decisive. Will SPS friction derail the momentum, or can India and the EU rise to the moment and strike a historic, future-ready deal?
The world is watching—not just for what’s signed, but for what it signifies: A fairer, more inclusive global trade future.
11. FAQs
Q1: Why are India’s agri-exports to the EU facing rejections?
Due to stringent EU rules on pesticide residues, toxins (like aflatoxins), and microbial contamination—often stricter than WHO norms.
Q2: What is an SPS measure?
SPS (Sanitary and Phytosanitary) measures are food safety and animal/plant health regulations imposed to prevent disease and contamination.
Q3: What is India’s demand in FTA negotiations?
India wants greater access to EU markets for agri-goods and less restrictive SPS norms, or at least alignment with global standards like Codex.
Q4: What does the EU want from India in return?
Greater access for EU dairy, automobiles, spirits, and regulatory harmonization in sectors like pharmaceuticals and medical devices.
Q5: What happens if negotiations fail?
It could stall India’s larger strategy of boosting non-China trade ties and delay critical agri-export growth for years.
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