Jittery Kashmiri fruit growers worried after Govt's apple tariff slash

Removal of additional custom duty on apples won’t impact local players: Govt
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Representational Image File/ GK

Srinagar: The Government of India (GoI)’s move to slash additional tariff duty of 20 percent on US apples and walnuts have left Kashmir’s fruit growers dismayed and worried about their future in light of the drop in output, poor pricing, and other factors confronting them.

The fear among the growers is that now that high-quality US fruit would be imported to India at lower rates, as a result local produce would lose market share.

Kashmir Valley Fruit Growers Dealers Union President, Bashir Ahmad Basheer opposed the government's decision to lower import taxes on US apples because it will “have a negative impact on Kashmiri apples”.

“The primary apple-producing region in India is Kashmir, where more than 7 lakh families directly depend on the fruit industry for their livelihood. However, the government’s decision to reduce the additional import duty by 20 percent is not a good one for fruit growers,” Basheer said. “In fact, we were urging the government to hike import duties to support local growers, but instead it did the opposite.”

He said that they had been requesting a 100 percent tariff on the product imported from Washington and other foreign states. Kashmir Chamber of Commerce and Industry (KCCI) President, Javid Tenga said:

"It is astounding news that the GoI has decided to remove the additional import duty on apples, walnuts, and almonds imported from the USA. Such an untimely decision will not only harshly impact nearly seven lakh apple grower families of Kashmir but will at the same time affect adversely the livelihood of millions of others indirectly connected with the trade as the cheaply priced apples or dry fruits imported from the USA will obviously stand much stronger against the Kashmiri produce in the competitive market."

Tenga said that it is feared to spell doom on the nearly Rs 9000 crore worth apple industry which makes a sizable contribution to the State economy.

“The KCCI would, therefore, earnestly appeal to the GoI to reconsider the decision in the larger public interest," he said.

President of Fruit Growers Association, Sopore, Fayaz Ahmad Malik termed the decision as “unfortunate”.

"We are already facing production losses. Now this will further dent Kashmir's fruity industry," Malik said.

On September 5, the government announced the removal of extra import duties on a variety of American products, including apples and walnuts.

The announcement states that the import tax on Washington apples and walnuts has been reduced by 20 percent.

In retaliation for the US government's decision to levy a 25 percent charge on steel and a 10 percent duty on aluminum goods, the GoI slapped an extra duty on these items.

The year 2018 saw a tax dispute between the two nations.

Apple imports from Washington were down to $5.27 million in 2022–2023 from $145 million in 2017–2018 due to the additional levy.

President Apple Farmers' Federation of India, J&K, Zahoor Ahmad Rather said,  “The move is an assault on the livelihood of over 3 million people associated with the apple industry.”

He said that the reduction was bound to deepen the farmers' distress.

Rather said that over the last many years, the apple farmers in Kashmir had been grappling with losses due to the perennial blockade of the National Highway, unseasonal snowfall, low market rates, and high input costs.

What Govt says

The Union Commerce Ministry on Tuesday said the removal of additional custom duty on apples would not impact local players.

As per the PIB press statement, additional duties of 20 percent each on apples and walnuts and Rs 20 per kg on almonds were imposed on the US' products in 2019 over and above the Most Favoured Nation (MFN) duty as a retaliation to the US' state protectionist measure of increasing tariffs on certain steel and aluminum products. These additional duties imposed by India on US-origin products have been withdrawn as the US agreed to provide market access to steel and aluminum products under the exclusion process.

There is no reduction on the Most Favoured Nation (MFN) duty on apples, walnuts, and almonds, which still applies to all imported products, including US-origin products, at 50 percent, 100 percent, and Rs 100 per kg. It states that further, DGFT, vide its Notification No 05/2023 dated 8 May 2023, made an amendment in import policy for apples under ITC (HS) 08081000 by applying MIP (Minimum Import Price) of Rs 50 per kg for imports from all countries except Bhutan.

Therefore, this MIP would also apply to apples from the US and other countries (excluding Bhutan).

This measure would protect against the dumping of low-quality apples and from any predatory pricing in the Indian market.

"This measure will not result in any negative impact on domestic apple, walnut, and almond producers. Rather, it will result in competition in the premium market segment of apples, walnuts and almonds, thereby ensuring better quality at competitive prices for our Indian consumers. Thus, the US apples, walnuts and almonds would compete on the same level playing field as all other countries," the union commerce ministry said.

The market share of the US apples dwindled as other countries benefited from the imposition of additional retaliatory duties on the US apple and walnut imports.

This is evident in the increase of apple imports from countries besides the US, from US$ 160 million in FY 2018-19 to US$ 290 million in FY 2022-23.

Turkey, Italy, Chile, Iran, and New Zealand emerged as prominent apple exporters to India, effectively acquiring the market share once held by the US.

Similarly, in the case of walnuts, the imports increased from US$ 35.11 million in FY 2018-19 to US$ 53.95 million in FY 2022-23, and Chile and UAE became the largest exporters to India.

In the last three years, the import of almonds has been about 2,33,000 MT, while domestic production is only 11,000 MT, and India is highly dependent on imports.

Therefore, the removal of additional duties would now ensure fair competition among the countries, which are exporting these products to India, it adds.

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