Apple Growers Fear Trade Deal Impact

Apple growers in Jammu & Kashmir and Himachal Pradesh are expressing significant apprehension regarding the potential repercussions of the proposed India-US trade deal. Concerns center on the possibility of weakened price protection and a substantial rise in imported apples, threatening the livelihoods of domestic farmers.

Recent reductions in import duties on apples from various supplying nations, coupled with the ongoing trade agreement discussions with the US, have amplified these worries. While the government asserts that the interim pact includes safeguards and quota-based concessions for US apples, growers fear a shift in import dynamics.

Previously, apples faced a 50% import duty. Now, duties on imports from New Zealand have been cut to 25%, and from the EU to 20%. The anticipated cap for US apples is also around 25%. Concurrently, the Minimum Import Price (MIP) has been raised from Rs 60 per kg to Rs 80 per kg to act as a non-tariff barrier.

Despite government assurances, stakeholders argue that lower duties combined with the MIP might incentivize under-invoicing and create price pressure on domestic produce. They highlight that while MIP can deter very cheap imports, it may not adequately protect against higher-cost producers when duties are reduced.

India, a major apple producer and consumer, faces an annual import gap of 0.4-0.5 million tonnes to meet its demand of approximately 2.5 million tonnes. The apple economy in Jammu & Kashmir is valued at Rs 12,000 crore, and in Himachal Pradesh at Rs 4,500 crore.

Concerns also extend to the lack of clarity on volume caps for US apple imports, while existing agreements with the EU and New Zealand have such limitations. Historical data indicates a correlation between duty reductions and increased imports, prompting fears of a return to higher shipment volumes seen previously.

Experts warn that duty cuts could be devastating, eroding price protection and leading to a surge in cheaper imports. Issues such as quality checks, biosecurity, and the vast disparity in government support between Indian and US farmers are also being raised.

Conversely, some traders suggest that the primary market distortion stems from cheaper imports from countries like Iran and Turkey, with US, EU, and New Zealand apples remaining relatively expensive due to higher production and logistical costs. They argue that even a zero-duty scenario for US apples would result in prices that do not significantly impact the majority of the Indian apple market.