India has threatened to slap an additional 25 per cent duty on US apples with effect from 4 August – bringing the total duty to 75 per cent.
The duty hike for apples is one of a raft of tariff increases, with close to 30 products from the US affected, including almonds and walnuts.
India’s finance ministry issued two notifications on Wednesday outlining the new tariffs of US products, which come in response to the Trump administration’s unilateral move in March this year to raise import duties on certain steel and aluminium products.
Under the new tariff structure, US apples will be subject to a duty of 25 per cent, on top of the 50 per cent levied on all apple imports, bringing the total duty on US apples to 75 per cent
Duties will also increase on three key nut products, with almonds in-shell increasing from Rs35 per kg to Rs42 per kg, and shelled almonds from Rs100 per kg to Rs120 per kg. Walnuts meanwhile will face a whopping 120 per cent duty, up from 30 per cent earlier.
While changes to indirect taxes such as import duties usually come into effect from the date of notification, in this case the duties will not be applied until 4 August, Indian newspaper the Hindu noted. A senior tax official reportedly told the Hindu’s BusinessLine that the duty had been announced in advance so that “there is room for negotiation, if required.”
Tarun Arora of major Indian fruit importer IG International told Asiafruit he was hopeful the duty would not be applied, noting that the two governments were set for negotiations. A US delegation led by assistant US trade representative (South and Central Asian affairs) Mark Linscott is due to hold talks with Indian counterparts on 26 June to try and find solutions to the contentious trade issues.
Nevertheless, Arora predicted US apple import volumes would drop significantly on the back of the announcement, especially since India’s domestic apple season is starting soon. “Other apple exporting countries will definitely gain from this decision. Buyers have already cut back orders due to the hike and with Indian apples due to arrive in August any increase in the duty will definitely have a big impact on demand for Washington apples,” said Arora.
Parth Karvat of Yupaa Fresh, another leading Indian importer, described the news that the tariff increase would be applied from 4 August as “a relief for importers”. In a WTO notification issued on 18 May, India had threatened to ratchet up the tariff on US apples by 30 per cent before 21 June while shipments were still in full flow.
“Most imports of US apples will be concluded for the season by 4 August, and many importers pulled back on their orders after the announcement in May that the duty would be increased before 21 June,” said Karvat. “Now, importers can plan more effectively. They know the shipments they already ordered or have on the water won’t be affected by the additional duty. And they can see that anything they order from now on could well be assessed at the 75 per cent duty due to be applied in 45 days.”
Ambiguity over announcement
The notification of the duty increase on apple imports has caused confusion in the import trade and at Indian customs. The notification listed the 25 per cent tariff increase against the HS code for ‘fresh apples’ (0802 11 00) – rather than specifying apples of US origin, leading many in the trade to question whether the tariff increase appled to all Indian apple imports, not just those from the US.
Asiafruit understands Mumbai customs had begun charging 75 per cent duty on apple imports, regardless of origin, on Thursday. That reportedly followed a change to the apple import duty in the computer system, which is managed online. But Arora said the issue was a “one-off case”, and that the incorrect duty was corrected by presenting an exemption notification to the customs officer.
The Indian government is expected to publish a clarification in the coming days confirming that the duty applies only to apple imports from the US.
India has become the third-largest market overall for Washington apples, second only to Mexico as an export market. The Washington apple industry has enjoyed a record season in India, fuelled in part by the absence of Chinese apple imports, with shipments crossing the 7m-carton mark, up from 4.5m cartons in 2016/17.