Opposition questions reduced import duty for American apples: How the move may impact Indian farmers

Leaders of Jammu and Kashmir’s parties, National Conference leader Omar Abdullah and People’s Democratic Party (PDP) president Mehbooba Mufti, had also appealed to the Centre on Monday (September 11) to reverse its decision, arguing it would hurt domestic farmers’ sales.

Why was the duty first imposed on American apples?

In 2019, an additional duty of 20% was imposed on apples, walnuts, almonds and some other products imported from the US. It was essentially a retaliatory move after the US hiked tariffs on certain steel and aluminium products from India, by 25 per cent and 10 per cent, respectively.

The Indian government removed the 20% duty from all the aforementioned products in June this year, just days before Prime Minister Narendra Modi visited the US. Moreover, both countries were able to reach an agreement to resolve six disputes at the World Trade Organization (WTO).

Additional Secretary in the Department of Commerce Peeyush Kumar told news agency PTI that India is not giving anything “extra” by removing the 20 per cent duty and it was not that “we have opened a floodgate” for American apples.

So this will not lead to American apples flooding the market?

Probably not, for three reasons.

The first is that US apples will continue to attract a 50% import duty. This duty is applicable to apples imported from all countries and only the additional duty has now been removed.

Second, the retaliatory tariff on US apples has not stopped the growth in India’s overall imports of the fruit. On 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.

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. 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 That suspension has since not been revoked.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?

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 lakh tonnes 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 have hurt domestic growers. Apple harvesting kicks off in mid-July 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.

This year, another factor here is the heavy rains and landslides in the state during July and September. According to the state emergency operation centre, 418 people have died (265 in rain-related incidents and 153 in road accidents) since the onset of monsoon on June 24 till September 9, while 39 are missing.

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.

This is an updated version of an explainer first published in June 2023. You can click here to read it.