The Hindu Business Line : Cashew exports may be hit on withdrawal of benefits

THE recent withdrawal of export benefits to cashew under the `Vishesh Krishi Upaj Yojana' (VKUY) scheme is likely to have a negative impact on its exports.

Under the amended Exim policy, the Centre had included cashew in the Minor Forest Produce, qualifying it for benefits as per para 3.8.2 of ITC (HS) classification of export and import items. "But to our surprise, a subsequent public notice No.4 dated April 27, 2005 has deleted cashew from the list, depriving us of this benefit," cashew industry sources told Business Line.

According to Cashew Export Promotion Council of India (CEPC), VKUY (Special Agricultural Produce Scheme) has been introduced "to promote exports of fruits, vegetables, flowers, minor forest produce and their value added products by giving incentives to exporters of such produce."

Under the scheme, exporters of such products were entitled to duty credit scrip equivalent to five per cent of the f.o.b value of exports for each licensing year from April 1, 2004. Besides, the scrip and items imported against it would be freely transferable.

Anticipating these benefits from April 1 last year, the industry sources said they had taken steps to push up exports at competitive prices in the world market besides making imports of raw materials at higher prices. Following the deletion of cashew from the list, the processor-exporters now apprehend that they would be deprived of this benefit for the last fiscal.

They said it would have a negative impact on the competitiveness of Indian cashew in terms of value in the overseas markets, they said.

Partly because of this facility, in 2004-05, cashew kernel exports had touched a record 1,26,667 tonnes valued at Rs 2,709.24 crore as against 1,00,828 tonnes valued at Rs 1,804.43 crore in 2003-04, Mr Sasi Varma, Secretary, CEPC, said.

Imports of raw nuts by the industry with an installed capacity of one million tonnes were also the highest last fiscal with 5,78,884 tonnes valued at Rs 2,183.26 crore as against 4,52,398 tonnes worth Rs 1,400.93 crore the previous year.

The industry has to depend on imported raw materials as indigenous production continues to remain far below the demand, he said. In fact, India is said to be the top importer of raw cashew nuts.

According market sources, cashew kernel exports are estimated at around 2.3 lakh tonnes a year with a projected annual growth of five to eight per cent over the next five years. India has a major share of the world market at around 60 per cent.

The withdrawal of export benefits has come at a time when Vietnam's cashew industry, supported by its Government, is fast emerging as a serious threat to Indian cashew, the sources alleged.

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