Stakeholders apprehensive about immediate and long-term results
While the decision not to join the Regional Comprehensive Economic Partnership (RCEP) trade deal brings much cheer to the ailing cashew sector, it has left a section of stakeholders apprehensive about the immediate and long-term results. By exiting the free trade agreement, India can easily address the issue of the inferior quality imports from member countries flooding the domestic market.
Countries like Vietnam, India’s biggest competitor, where processing is fully mechanised, end up with a lot of broken kernels which eventually land in Indian ports under false Harmonised System Nomenclature (HSN) codes.
“While the processing cost in Vietnam is just ₹650 per bag, here it comes around ₹3,800. They have been sending the low quality product to India for some time and the difference in price has destroyed the prospects of the domestic industry. The decision is definitely a relief to the sector for the time being, but we should remember that it’s not final. It was taken following intense protest from farmers and trade unions, but currently we are open to negotiations. We can reclaim the domestic market only if it becomes permanent,” says S. Jayamohan, chairman, Kerala State Cashew Development Corporation.
Another factor worrying the processors is the implementing window, as the industry is in need of immediate support.
The Directorate General of Foreign Trade (DGFT) had increased the import price of cashew in July in a bid to block the inflow of whole and broken kernels to Indian ports. As per DGFT’s revised policy, the import price for broken cashew is now ₹680 per kg instead of ₹288 and for whole cashew it was hiked from ₹400 to ₹720. But the processors say that cargo is still being released at earlier rates.
“All these policies come with a lot of loopholes and till September there was no change. They have been releasing consignments at rates much below the new Minimum Import Price (MIP) and some people are still misusing advance authorisation licences to import cashew kernels. While we are happy about the decision, it needs to be implemented at the earliest. Continuous monitoring is another requirement. And we also want the existing import duty of 2.5% withdrawn, which is a long-standing demand,” says Nizamudeen I., president, Federation of Cashew Processors and Exporters.
According to Cashew Export Promotion Council of India (CEPCI) authorities, there is already an anomaly in the ASEAN agreement which exempts roasted kernels, which is a value-added product, from import duty.
At the same time the plain cashew kernels, a base product, is subject to 70% import duty leading to a surge of mis-declared imports.
“Currently large consignments of semi-finished kernels are reaching India under schemes like advance authorisation and duty-free tariff preference. This has been disturbing the balance of domestic market and we want the government to ban the import of all types of finished and semi-finished kernels under de-shelled category. Otherwise, the industry will be wiped out slowly,” says R.K. Bhoodesh, chairman, CEPC.