The Hindu Business Line : `E. Europe good market for processed foods'

The Indian Institute of Foreign Trade's (IIFT) Centre for Small and Medium Enterprises (SME) in its recent study has noted that the east European countries in the enlarged European Union will positively impact on India's SME export of processed food items.

The overall impact of the enlarged EU will be positive for the processed foods items covered under meat, cereals, miscellaneous grains, seeds and foods, gums, resins and vegetables sap and extracts and miscellaneous foods.

The study, however, has found the fish and seafood items exports will receive negative impact.

The study has shown that the impact on export of processed foods from India to countries such as Poland, Hungary, and Slovenia would be positive, it will be negative in Estonia.

In other acceding states, it will be mixed.

The 10 east European countries that acceded to the EU in May 2004 are Hungary, Poland, Czech Republic, Slovakia, Slovenia, Malta, Cyprus, Estonia, Lithuania and Latvia.

Among the countries acceded to the EU, Poland accounts for the maximum share of imports from India with 37 per cent.

The study, which analysed the export potential on the basis of tariff differentials between the respective acceding country's tariff prior to the EU enlargement in May 2004 and the common EU tariff, has revealed that beef, frozen meat, rice, raw peanuts, oleaginous nut/fruit, plant, medic, perfume, lac, gum, resin balsams, pectates and extract of coffee are the main items on which the impact would be positive and the SMEs involved in the export of these commodities would gain maximum gains.

At the same time, the potential for food items such as live fish, frozen fish, fillet/other fish meat, crustaceans and other sea foods would be negatively impacted affecting the fortunes of the SMEs involved in these items.

According to Dr K. Rangarajan, Professor and Head, IIFT's Centre for SME studies, the trade figures of these acceding countries show that their trade is largely oriented towards the 15 EU nations and given the fact that the tariff rates in these acceding countries are higher than the EU average, imports from third countries such as India will become more attractive as against the imports from the EU-15.

Barring Slovenia, Latvia, Lithuania and Cyprus, which are the other major export destinations for India, the remaining countries account for very negligible volume of imports from India.

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