Controlled import, proper taxation could ensure an even field
Kashmir’s apple industry —which harvests worth Rs 10,000 crore crops annually, provides livelihood to roughly 2 million people, and adds more than eight percent to the GDP of Union Territory (UT) — is under a great threat due to the flooding of untaxed Iranian apple into the Indian market.
Given the US sanctions on Iran, the country is unable to send its apple produce to European and Middle Eastern markets, thus Iranian traders import the fruit to India via Afghanistan (through Wagah border), and from Dubai via Gujarat (in ships) on zero duty under the South Asian Free Trade Area (SAFTA) agreement. Though Iran is not in the SAFTA, its apple comes via Afghanistan and Dubai bypassing import duties. Besides Kashmir, the Iranian apple import has also affected the apple produce from places like Uttarakhand, Himachal, and Nagaland. However, these states, in comparison to Kashmir, produce negligible apple crops, thus they are not that affected.
The apple cultivators in the Valley say that since market prices of the apple have fallen fifty percent in the India Mandis recently, a large quantity of their produce is awaiting as unsold in the cold storages and godowns here, getting rotted.
Kashmir Valley Fruit Growers Cum Dealers Union has written a letter to Prime Minister Modi requesting him to ban the tax-free import of apples from Iran while upholding his ‘Make in India’ slogan. However, they say, their request has not been responded to so far. The fruit growers recently staged a protest in the Sopore fruit mandi in north Kashmir — known as Asia’s second-largest fruit mandi — demanding tax impose on the apple imported from Iran.
To grasp more information about the issue and to understand the intensity of the threat to Valley’s apple trade, KASHMIR IMAGES spoke with some stakeholders and experts. They say Iranian produce seems to play the role of proverbial ‘bad apple’ which is about to ‘spoil’ the whole apple industry of Kashmir — also called Iran-i-Sagheer (little Iran).
Here are the excerpts:
Frankly speaking, I do not have any dependable information about the matter. In my department, marketing is not my domain. I see only the developmental side of the fruit industry. However, I have received a mail from fruit growers complaining that the tax-free import of Iranian apples into the Indian market has been causing losses to our apple trade. After receiving the complaint, I wrote to the government (LG administration in J&K), suggesting that duty-free apples from Iran should be stopped. As per my information, our government has taken up the matter with the central government. I would say that the taxes should be levied on the Iranian apple the way these are imposed on the fruit imported from any other country.
Iranian apples are being sold at just Rs 15 to 20 per kg in the Indian retail markets these days, causing a huge impact on the sales of Kashmiri apple. Given the availability of low-priced Iranian apple in the markets, the market value of Kashmiri apple has fallen up to fifty percent. Buyers are no more interested in Kashmiri apple. Worst, we have about 1.5 crore apple boxes pending in our CA (Controlled Atmosphere) storage in the Valley. Our growers are supposed to sell all this fruit in the coming few months. But as long as Iranian low-priced apple are freely available and keep flooding into the Indian mandis, there are least chances that our growers and traders could sell the stock.
If the government does not stop the import of Iranian apple, our industry would meet enormous losses in the coming months. Ours is a 15 thousand crore rupees worth industry, which provides livelihood to lakhs of people here. Kashmir produces more than 75 percent apple in India. The official figures say that this industry adds 12 percent to GDP in the UT. Therefore, any setback to our apple trade would impact our overall economy. That would be nothing less than a tragedy for us.
A few weeks ago, we wrote a letter to the Prime Minister, requesting him to ban the import of Iranian apple. We also sent a letter to the Lieutenant Governor (LG) of Jammu and Kashmir, informing him about the threat to the apple industry. Also, we have brought the matter to the notice of the Union Agriculture minister. However, we have not received any response from the government so far. But we hope the government will do the required initiatives to safeguard Kashmir’s fruit industry.
In Kashmir, the fruit industry and the truck transport sector are interdependent. Every year, thousands of trucks loaded with fruit, mostly apple, take trips to the mandis in the various states across the country.
In the peak season, four to five thousand trucks loaded with boxes of apple leave from the local mandis in Sopore, Pulwama, and Shopian, and so on to the places like Delhi, Kolkata, Mumbai etc; each of these trucks usually make 15 to 16 trips outside J&K a year. And, every truck, besides its owner, provides living to at least three people —two drivers and a conductor. Simply, transporting fruit boxes outside the UT fetches livelihood to thousands of families in Kashmir. I, along with some partners, have a fleet of around 30 trucks, which is mostly deployed to transport fruits to the outside J&K. We have been in this business for years now.
However, since sales of Kashmiri apple have got affected in the Indian markets, we eventually have lost our business too. The freight rate of transporting fruits has fallen more than fifty percent. For instance, earlier we used to charge fruit traders up to 100 rupees for carrying a box of apple to the outside J&K; but now the same traders offer us just Rs 40 as a carriage for the same box. They say that since they are selling their fruit on the losses, they cannot afford to pay us as usual. Many of the truck owners simply refuse to go outside J&K on such a low freight rate.
I don’t know how much affect the Iranian apple has drawn on the fruit industry of Kashmir, but I can certainly tell you that Valley’s truck transport has got hugely impacted during the past couple of months.
Any commodity, if allowed to be imported without a custom duty in to the country, is bound to cause damage to its local industry. Custom-free apple from a foreign country would surely pose a great threat to our domestic apple industry. Kashmir’s apple production cost, due to certain reasons, is higher than that of apple production cost in other parts of the world. First, because our fruit industry lacks mechanization; second, our labour cost is higher in comparison with the labour cost in other countries; and, third, we do not have a rail system here, thus we rely on the road transport to take our fruits in the mandis outside the Valley. In this scenario, how Kashmiri fruit growers can compete with foreign production, which is allowed to be imported without required taxation?
Sadly, all this is happening at a time when our government is working on a mega program for the high-density apple crop in the Valley. The government is aimed to transform Kashmir’s ten thousand crore rupees apple industry into the fifty thousand crore industry. Under this mega scheme, 5500 hectares of land is being brought under the high-density plantation of apple and other fruits. The government is investing enormously in this project. For instance, a number of schemes have been floated to provide subsidies to the progressive and prospective orchardists to ensure High-Density Plantation gives higher yield.
Usually, we used to produce 10 ton apple from one-hectare land, but the high-density orchard system would enable farmers to grow 50 to 60 ton apple from the same quantity of land. Further, the government is working to explore the potential of apple processing in the Valley as well.
Luckily, Kashmir’s fruit industry has a huge market of 1.3 billion people out there across the country. However, if a low-priced fruit from a foreign country keeps flooding the markets, our growers and traders will be unable to save their market. I am sure that the government would take the matter with the same intensity of seriousness that it has been utilizing to explore the high-density crop yielding potential of Kashmir.
China is the world’s largest apple producer. It grows fifty percent of the total apple production of the world. In terms of apple producing countries across the world, United States (US) is at number 2 and European Union at number 3; and Turkey, Iran, and India come at number 4.
In India, 75 to 78 percent of total apple production comes from Kashmir (the percentage variation depends on the climate and some other factors). Out of a total of 26 lakh metric tons of apple production in India, Kashmir produces 19 metric tons. The rest of the production comes from states like Himachal, Uttarakhand, and some other places in the northeast.
As far as apple from Kashmir is concerned, it has a huge market in India. This is such a vast market that it consumes not only the total 26 lakh metric tons apple production of the country but also imports 3.5 lakh metric tons further from the US and other countries.
A few years ago, a study, I was a part of which, found that despite the Washington apple reaches to the ship docks of Mumbai and Calcutta at the cost of Rs 150 per kg (with 0.75 dollar import duty), and then to the retail market at Rs 200 or so; it does not affect the sales of Kashmiri apple anywhere in the country.
That said, I would emphasize that the quantity of the imported fruit should not be beyond a limit. Until India continues to import apple within a certain limit, the sales of Kashmiri fruit will not get affected. I think Iranian apple, even if it comes as tax-free, would not affect Kashmiri apple provided the Iranian fruit is not imported beyond a certain limit. We should not oppose the import of the apple from foreign countries, but ensure that the imported fruit does not eat up the market share of our domestic fruit.
I would also suggest that we should keep enhancing our supply chain and improve the infrastructure back home. For instance, presently we have the one lakh metric ton fruit storage capacity here. We should need to build up our storage capacity up to 4 lakh metric tons so that we will be able to regulate the supply round the year. And, in times, when the market is not in our favor, we should be able to hold our produce.
Lastly, let me tell you that India is a market with a diversity of customers. They purchase Charrey from the Valley at 200 rupees per kg. But at the same time, there are some customers who prefer to purchase cherries from Turkey at Rs 1000 per kg. Kashmiri apple will always get its customers across India, provided we improve our marketing strategy.
Iranian apple are being sold cheaper than the Kashmiri apple in the markets across the country these days. And, the fact is that the Iranian apple is not of any lesser value than the Kashmiri apple, in terms of the quality and taste of the fruit. That means we are not even in a position where we can sell our fruit saying that it is better than the Iranian apple.
Although, we have some produce of new verities of apple such as Redlum Gala, Jeromine, Chimror, and so on. However, we produce these verities in lesser quantities. In bulk, we produce traditional Kashmiri apple — red delicious. Our traditional orchards mostly produce red delicious. Even Kashmir’s red delicious is not that good in terms of its looks, if compared with the Iranian apple. Not that Kashmir’s red delicious apple is of any less quality, but the fact is that ours lack colour development in comparison with the Iranian red delicious.
Therefore, the Iranian apple has posed a challenge to the Kashmiri apple in the market. Customers go for the cheaper rates. In this situation, apple growers in Kashmir are at loss.
If Iranian apple continues to come at a cheaper cost in to the Indian market, it will have an adverse impact on our apple industry. In recent years, some of our farmers had converted their agricultural land into horticultural thinking the growing fruits would fetch them more income. All these new orchards are in a developing process at this time. They are supposed to yield fruit in coming few years. However, if Kashmiri apple losses its market to the Iranian apple, the investment by the farmers on transforming agricultural land into horticultural land would go in vain.