Will India-US trade war hit dry fruit sales?

India’s retaliation of raising import duties on items majorly imported from the USA will result in higher prices of dry fruits, particularly almond and walnut, say businessmen. The USA is the largest suppliers of these commodities and there are not many alternative suppliers, which can help India diversify its imports.

What came as shock for importers and traders is that the hike in duties is not just targeted at imports from the USA but all the imports, independent of the source of the imports. The Ministry of Finance (MoF) in a notification on Wednesday, raised the import duty on walnut from 30% to 120% and on almond by 20%. This means that prices will rise for all imports and not just from the USA.

Dharmesh Pariyani, an importer of dry fruits said that with the rise in import duties, the market price will definitely rise. “Whenever, such things have happened, end users always rationalize their spending. The rise in duties is significant. We hope some compromise is reached between the two countries,” said Pariyani.

The US is the largest source of imports of walnut and almond. The state of California in the USA is the biggest source of imports of almonds in India and with the rise in import duties, these almonds will get costlier. According to estimates, the USA constitutes about 25% of India’s total import of walnut.

Traders say that the move by central government may not gel with the ground realities. “The decision could not have come at a worse time. The business is already down after demonetization and GST. Now with the rise in import duties, the products will become less affordable for the end users and business will further fall for businessmen,” said Hiren Gandhi, former chairman of Food Committee of Gujarat Chamber of Commerce and Industry (GCCI).

Gandhi also informed that duties will be levied on the base price of the commodity and not the market price. “As of now, prices of many commodities like black pepper are ruling lower than the base price. An importer will have to pay tax as per the higher price, which will further raise the price of the commodity affected demand and sales,” said Gandhi.

The combined impact of these moves is such that market demand has dropped in smaller cities, towns and villages. A rise in prices at this stage means that the demand will fall further.


source: http://www.dnaindia.com/business/report-will-india-us-trade-war-hit-dry-fruit-sales-2628215