Srinagar: At a time when the apple harvest season is gaining momentum in Kashmir, the Union government’s decision to waive off 20% tariff on imported apples is turning into a fresh headache for the Lieutenant Governor Manoj Sinha’s administration.
The opposition parties in Kashmir have urged the Bhartiya Janta Party-led Union government to roll back the decision while local stakeholders are anguished that the waiver will negatively impact Kashmir’s apple industry, which employs more than 30 lakh people directly and indirectly.
The revision of tariff, which has chopped off extra 20% from the 70% tariff imposed since 2019 by New Delhi on the premium Washington apples, was announced during Prime Minister Narendra Modi’s state visit to the United States in June this year.
The decision came into effect on September 5 when the Union finance ministry reportedly released a notification ahead of the meeting between Modi and his US counterpart Joe Biden on the sidelines of the G-20 Summit in the national capital.
The notification announced the tax waiver on several US products such as walnuts, lentils, chickpeas and apples.
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According to Kashmir-based traders and growers, the entry of Washington apples with a tax waiver into the market at a time when the apple harvest season is set to pick up will lead to pricing fluctuations which will hit the local industry badly.
‘Kashmiris put in agony only to receive applause from foreign countries’
“High inflation has already led to a shoot up of the cost of apple production while the yield has also fallen over the years. The tax waiver [on imported US apples] will hit not just the farmers of Kashmir but also in Himachal Pradesh and Uttarakhand. The government should reconsider the decision,” said Bashir Ahmad Bashir, president of the All Valley Fruit Growers and Dealers Association (AVFGDA), the leading association of apple growers and traders in Kashmir.
Speaking with reporters on the sidelines of a function here, former J&K chief minister Omar Abdullah called for a rollback of the waiver while alleging that the decision “reflects the disconnect” between the people of J&K and the administration, which is run directly by the Union government.
“We don’t want imported apples, walnuts or almonds here,” Abdullah said, “It is hard to believe that the government is increasing hardships on the people of Kashmir in order to please the US and other countries. Kashmiris are put in agony only to receive applause from the foreign countries.”
Role of the import tariff
Kashmir is the country’s apple basket, producing around 21 lakh metric tonnes of fruit last year (or more than 70% of apples produced in India) which generates a revenue of between Rs 10,000-Rs 14,000 crore in J&K. The horticulture sector contributes around eight to 10% of J&K’s Gross Domestic Product.
In 2019, India and the US were caught in a trade war when, under President Donald Trump, Washington raised tariffs by 10-25% on specific steel and aluminium items, citing national security concerns. India followed suit by increasing tariffs on several US products, including Washington apples.
The imposition of extra tariff drastically reduced India’s apple imports from the United States. From US $145.2 million in 2018-19 when the country imported US $305.71 million worth of apples worldwide, according to official data, the apple imports dropped to only US $5.27 million in 2022-23 when the total apple imports were at US $295.94 million.
In the past four years, Turkey has emerged as the leading apple supplier for India, making up for more than 84% of total apple imports followed by Italy, Chile and Iran.
With the harvest season picking up in Kashmir and elsewhere in the country, the arrival of the premium quality Washington apples in the market, which are wax-polished to increase their shelf life, has dampened the spirits of local growers and traders, who were hoping to capitalise on low domestic production this year.
This year, Jammu and Kashmir and Himachal Pradesh suffered between 40-50% loss of apple produce due to unseasonal rains, hailstorms and flood which led to spread of diseases such as scab and powdery mildew in apple trees and immature fruit droppings.
Representative image. Photo: Pexels/rohitsinghprashar
‘Waiver will narrow down price difference’
According to traders, Kashmir’s Red Delicious variety, which makes 70-80% of total apples produced in Kashmir, sold for around Rs 75 per kilogram in the wholesale market last year. One box of Kashmiri Red Delicious apples, which contains around 20 kilograms of fruit, fetches Rs 1,200-1,500 in New Delhi’s Azadpur Mandi, one of the country’s largest fruit markets.
In comparison, a kilo of the imported US apples sold for around Rs 120 in the wholesale market of Azadpur Mandi, according to a trader. A 32-kg box sold for Rs 3,000-4,000 last year while a 25-kg box fetched Rs 2,500-3,000.
The revision of tariff will reduce the cost of the bright-red and glossy Washington apples in wholesale markets to Rs 100 a kilo, making them a direct and more powerful competitor for local apple varieties which are dull in colour and also lack lustre.
“The waiver will narrow down the price difference between imported and local apples. The quality of imported apples is exceptionally high and our apples don’t stand a chance in front of them,” said Ghulam Jeelani Dar, an apple trader from central Kashmir.
Mohammad Ashraf Wani, a grower from Shopian, one of the largest apple producing districts in Kashmir, said that the farmers in the US are more advanced in terms of the use of farming technologies and the subsidies provided by their governments.
“The waiver on tariff will hit both growers and traders in India equally as the domestic varieties of apples may not be able to compete with the Washington apple,” Wani, former president of the Shopian Fruit Mandi, said.
However, some traders believe that the local varieties of apples will be equally in high demand due to low production and the central government’s waiver will not lower the prices of local apples.
“The demand for apples is high this year due to low production. Thus the tariff waiver on imported apples will not have any significant impact on local producers and traders this year,” Ravinder Chauhan, president of Apple Growers Association of India, told The Wire.
Duty policy and politics
India imposes 35% duty and 15% cess on apple imports, taking the total tariff to 50% of cost, but the tariff was set at 70% in case of the US apples in 2019.
The deal to waive off 20% tariff came after the Union government announced a blanket ban on free import of apples if the cost, insurance and freight (CIF) price was less than or equal to Rs 50 per kg.
The policy was rolled out after underpriced apples from Iran made their way into Indian markets through Afghanistan, which is the second country alongside Nepal to enjoy duty-free trade with India, putting the local growers in Kashmir, Himachal Pradesh and Uttarakhand on the back-foot.
There were reports of many growers struggling to recover the production costs due to significantly low prices of imported apples.
“Importing apples is not a wise policy decision,” Wani, the trade leader, said, “Being home to the world’s one-fourth population, our country is sufficient to consume the local production. While the government may not be able to increase tax duty to avoid any trade issues with the US, it can increase the cess on imported apples.”
He added: “If Japan can impose 100% cess on rice imports to protect local farmers, what stops the Union government from taking a similar decision? The increase in cess will provide a level playing field for both local and imported apples.”
Wani believes that the government was forced to invoke CIF price tag on imported apples because of the loss of tax revenue, “It was a calculated decision to prevent tax pilferage rather than a decision for the welfare of farmers. If the government is indeed concerned about Kashmir’s apple farmers, it should announce a Minimum Support Price and crop insurance scheme for them,” said Wani, the grower from Shopian. CIF or ‘cost, insurance, and freight’ are charges paid by a seller for exports.
Bashir, the AVFGDA president, said that the Union government should impose 100% import duty on imported apples if it wants to protect the local growers, “Otherwise apple farming will become an unsustainable practice in Kashmir and elsewhere in the country,” he said.
Peoples Democratic Party President Mehbooba Mufti took to X, formerly Twitter, urging the Prime Minister’s Office to intervene in the matter.
“The GOI’s decision to remove additional duties on apples, walnuts, and almonds will have a devastating effect on local growers in J&K, who are already grappling with huge losses since 2019. I hope @PMOIndia reconsiders,” she wrote.