Govt removes extra import duty on US apples: How it can impact domestic growers

Probably not, for three reasons.

The first is that US apples will continue to attract a 50% import duty. This duty is applicable on apples imported from all countries. The Modi government has merely done away with an additional 20% duty on American apples. That was imposed on June 15, 2019, as a retaliatory measure to the then Donald Trump administration levying tariffs of 25% on steel and 10% on many aluminium products imported from India.

Besides apples, India had also slapped retaliatory duties on US almonds, walnuts, chickpeas (chana) and lentils (masoor). These have all now been removed and American imports will be treated on part with imports from other countries.

Second, the retaliatory tariff on US apples has not stopped the growth in India’s overall imports of the fruit. One the contrary, total imports have steadily risen from 1.75 lakh tonnes (lt) in 2013-14 (April-March) to 2.83 lt in 2018-19, and further to 4.59 lt and 3.74 lt in the last two financial years (Table).

Third, US apple imports — mostly from Washington State — peaked at 1.28 lt in 2018-19, the year before the additional duty came into force. Regaining those levels may not be easy, especially after having plunged to a low of 4,486 tonnes in 2022-23.

How has India’s apple import continued to grow even after 2018-19?

The US’ loss has been other countries’ gain. This has happened before. The table 2 shows that China was a major exporter of apples to India till 2017-18, even overtaking the US in the previous year. From June 2017, imports of apples and pears from China were suspended after Indian quarantine authorities cited the presence of mealy bug pests in shipments. That suspension has since not been revoked. The beneficiary was the US, which registered a jump in exports till 2018-19.

Post the retaliatory duty, Washington apples have heavily lost market share to fruit from Turkey and Iran. These two countries have emerged as top suppliers to India over the last three years, ahead of even other established exporters such as Chile, Italy and New Zealand.

Will the removal of the additional duty enable US apples to wrest back market share?

The timing of the move — giving a level playing field with its competitors — would help. Harvesting of Washington apples starts from August and extends till early-November. It allows for import of fresh fruit into India from mid-September through November. This is followed by supplies from cold-stored apples during December-January and, then, from controlled-atmosphere (CA) chambers from February right up to August.

CA storage entails manipulating the carbon dioxide (CO2) and oxygen (O2) concentration, along with temperature and humidity, in the chambers for increasing the shelf life of the fruits. Apples, like humans, breathe through intake of O2 and release of CO2. Respiration, however, also leads to ripening of fruits. By lowering the concentration of O2 and raising that of CO2, the respiration is slowed down, thereby extending fruit storability and minimum change in quality characteristics.

“Washington apples, unlike fruits of other origins, are available round the year. This is because a thin coat of natural wax is applied to the fruits in the warehouses after removing from CA storage and before shipping. This prevents moisture loss and further slows the respiration rate,” said a leading importer.

Can more imports from the US hurt Indian apple growers?

India’s production of apples was estimated at 24.37 lt in 2021-22, with Jammu & Kashmir (17.19 lt) and Himachal Pradesh (6.44 lt) accounting for the bulk of it. Imports, on the other hand, are only 4-4.5 lt. If US apples are going to simply replace apples from Turkey or Italy, it will not result in any significant rise in the total quantum of imports.

More than the quantity of imports per se, the timing of the decision to scrap the additional duty is what might hurt domestic growers. Apple harvesting will kick off from the middle of next month in Solan and the adjoining lower hills of HP. It extends from mid-August to mid-September in the main belt of Shimla and from mid-September to mid-October in the still higher altitudes of Kinnaur. Harvesting in the Kashmir valley begins in September and peaks in October, with arrivals continuing till early-December.

Given that harvesting of apples in HP and J&K is coterminous with that in the US (and other northern hemisphere producers such as Turkey, Italy, Iran and Poland), there could be some impact on price sentiment ahead of the marketing season. The Modi government has, however, imposed a minimum price of Rs 50 per kg (cost plus insurance plus ocean freight), below which no imports of apple would be allowed. The minimum import price, notified on May 8, will “be applicable on apples from the US as well as other countries…thus preventing any flooding and protecting domestic growers from predatory pricing,” an official statement said.