J&K walnut industry says under-invoiced imports hurting local livelihoods

Amiti Sen | | Updated on: Jul 26, 2022
File picture: A Kashmiri farmer breaks the inner shell of a walnut after a drying process in Srinagar. J&K accounted for about 92 per cent of the 2.82 lakh tonnes of walnuts  grown in India in 2021-22

File picture: A Kashmiri farmer breaks the inner shell of a walnut after a drying process in Srinagar. J&K accounted for about 92 per cent of the 2.82 lakh tonnes of walnuts grown in India in 2021-22 | Photo Credit: FAYAZ KABLI

In representations to the Centre, it seeks quantity-based tax on imports to stop under-valuation

Exporters and traders of walnuts produced in Jammu & Kashmir, the country’s major walnut growing region, have alleged that imports of the premium nut, especially from Chile, were being under-invoiced to avoid the 100 per cent import duty imposed to protect local producers.

Representatives of the Kashmir walnut industry, including exporters and the small scale sector, have sought imposition of quantity-based tax on walnut imports, as in the case of almonds, to stop undervaluation by traders as it “suppresses domestic prices’‘ and hits local industry and producers.

In separate petitions to the Prime Minister, the Finance Minister and the Commerce Secretary, the J&K Walnut Exporters’ Association and the Birpur Small Scale Industries’ Association, noted that the Centre’s well-intentioned move of imposing 100 per cent import duty on walnuts, to shield local producers and marginal workers from the unfair price advantages that large scale farmers in some other countries enjoy, had not worked due to rampant under-invoicing that was also resulting in estimated revenue loss for the exchequer to the tune of Rs 648 crore.

“The enormous import of undervalued walnuts into the Indian markets has smashed and depressed the prices of local walnuts. As the prices of local produce get dented, the livelihood of the population involved in the cultivation of walnuts gets badly affected,” the petitions stated.

The associations stressed on the need for imposition of quantity-based import tax on walnuts, just as has been done for almonds, so that there is no scope for escaping taxation through under-valuation.

Under-invoicing not only allows unprincipled importers to sell cheap, but also deprives the government of genuine import duty revenue that would come its way if the imports happened at the fair internationally prevailing rates, industry pointed out.

As against the internationally prevailing rates of over $3.80 per kg, walnuts are being imported at $1.30 per kg, thus avoiding 100 per cent duty on the remaining $2.50 per kg, which amounts to Rs 200 per kg, the representations noted.

“At this rate, the estimated loss of revenue against the import of 1,800 containers of 18,000 kg each will be staggering at Rs 648 crore. Also, it hurts GST collections to the tune of Rs 10 per kg, which for 1,800 containers will work out to Rs 32.5 crore and this chain of under-invoicing will, then, continue in the domestic market,” according to calculations made by the two associations based on current import figures.

This impact gets multiplied more than twice for walnut kernels obtained from cracking walnuts.

The under-invoicing by importers supresses prices, making the realisation value for Kashmir farmers very unremunerative, the industry organsations stated. “If this continues, there will be no incentive for these small farmers to initiate fresh plantations, and over a period of time, the trade will completely dry up,” the petitions said.

A total of 2.82 lakh tonnes of walnuts was grown in India in 2021-22, according to government figures. J&K accounted for about 92 per cent of the produce.

Published on July 26, 2022
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