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Foreign Imports May Spell Bane For Indian Apple Traders

India being an agrarian country, especially in the horticultural sector has always contributed to the GDP. According to the Commerce Ministry, there has been an increase in the fruits import by 3.8 per cent. Find out here how the importation will affect the economy and traders

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As per Commerce Ministry’s data, India's apple exports have risen by 82 per cent since 2014, while fruit imports increased marginally by 3.8 percent in the same time period. 

While India has long been known as an agrarian nation, its economy is gradually shifting to non-agricultural jobs. India is a leading exporter of vegetables and fruits owing to its extensive production of natural resources. As a result, promoting the horticulture sector and making sure it thrives is very important to achieving food efficiency and maintaining the export market. 

As per the data by National Horticulture Board(NHB) Jammu and Kashmir (70.54 per cent share) Himachal Pradesh (26.22 per cent) and Uttarakhand (2.66 per cent) are the largest producers of apples in the year 2021-22. India stands at the fifth position in the largest producer of apples, with China topping the chart followed by the European Union and United States.  Kashmir is the 11th largest producer of apples in the world. 

Contribution to GDP

Being an agrarian country, 42 per cent of India's total workforce is involved in agriculture  and  allied activities and horticulture accounts for one- third of the total agriculture gross value, the Economic Survey stated.

Asif Riaz, General Manager at Tara Blooms Pvt Ltd and expert in crop protection and protected cultivation said, “Horticulture - means fruits and vegetable production, it is highly supportive to Indian farmers to grow cash crops. Particularly small and marginal farmers growing vegetables and selling on cash every alternate day. More support for logistics and storage will be needed to handle the surplus production of a particular crop, for example last year tomatoes were destroyed by farmers due to poor prices in February-March months but after a small gap prices shot up.”

The ministry of statistics and programme implementation data said that in the current prices agriculture and allied activities grew at 15.2 per cent in the fourth quarter. In FY21, it was at 6.2 per cent. This results in an inflation impact of 11. 1 per cent in comparison to 3.4 per cent in FY21. The experts have to say that the increase in the growth of the non-crop sector is because of horticulture, floriculture and animal husbandry. 

 “Horticultural production is directly related to value addition and other processed food sectors. If production is increased, it will directly impact the overall economic progress in a positive way and vice versa,” said Vasanthan Selvam, Chief Executive Officer at EDII Periyakulam Horti Business Incubation Forum, Tamil Nadu.

The Import Business

During April-November 2021-22, the apples arrived from Iran (7.33 per cent) , the United Arab Emirates (3.29 per cent) and Afghanistan(0.43 per cent). Majority of the apples (82 per cent) are imported from Chile, New Zealand, Turkey, Italy, Brazil and the United States, according to Commerce Ministry data. 

Chile accounts for a quarter of import of apples, while New Zealand (16.45 per cent), Turkey (12.43 per cent) and Italy (10.8 per cent) contribute to the import business.

"The apple import in India has doubled to a record of 4,36,194 tonnes from 2,15,538 tonnes in 2020, " a report published by Fresh Intelligence analysis stated.

Traders’ Turmoil

"This year, 21 heatwaves have hit Himachal Pradesh between March and April , which has affected the production of apples at various stages,"  Delhi-based Centre for Science and Environment report stated. According to the Himachal Pradesh Met department, the state witnessed 95 per cent and 90 per cent less rainfall in March and April months. This has indeed hampered growth of apples in the state.

On the other hand, the Jammu and Kashmir Horticulture sector contributes almost 8 per cent to the GDP. Nearly 70 per cent of the traders are directly or indirectly dependent upon horticulture for their livelihood. 

When asked about how the import of apples hinders the trading of traditional dealers in India, Riaz claimed,"Import of any fruit does not affect the dealers/traders margins, yes surplus imports forced farmers to compete with imported ones. Traders sell imported fruits at higher prices.” He added that apples are a special case because the shelf life of this fruit is longest under ideal storage conditions. If imports are reduced, exports will also be affected.

The packaging material price  has also shot up as there is a sharp increase of Rs 5000 per tonne of kraft paper in 2021, as per the Federation of Corrugated Box Manufacturers of India (FCBM). In the previous year, the Centre had levied the GST on corrugated boxes from 12 per cent to 18 per cent. The cost of each apple packaging tray cost Rs. 200. 

Riaz commenting on this issue said, “Previously taxes on packing and other material used in agriculture activities were NIL or at minimum level, but GST is a big issue, it is very high on agriculture implements, tractors and other machineries and many inputs. GST should be abolished and subsidies can be reduced as a balancing act.”

“Government should first reduce the GST on Agri inputs like pesticides and fertilisers. Packing materials will not be a big concern for farmers,” Selvam said.

Indian Farmers Fertiliser Cooperative in 2021 have increased the prices of the fertilisers and pesticides, making it more difficult for the producers. 

The traders across Himachal Pradesh and Jammu and Kashmir are also demanding to increase the import duty on the apples. The Fruit, Vegetables and Flower Growers’ Association, Himachal Pradesh have submitted a memorandum to the chief minister of the state in regard to the cheap import of apples from Iran under Free Trade Agreement.  As a result, the traders have to sell apples at a low cost to get away with storage. 

The construction of small-scale storage facilities has also been stymied by a lack of incentives or subsidies from the government.