Nasir Hamid Khan
sunfresh1102@gmail.com
On 3rd of February, even when details about the Trade Deal were being sought in the Parliament of India, the Kashmir Chamber of Commerce and Industry came out with a press statement which, among others, hailed the leadership of Commerce Minister Piyush Goyal and went on to declare that the deal was a ‘landmark step’ which would be a ‘major boost not only for the handmade carpet sector but for the entire handicraft industry of Kashmir.”
Piyush Goyal has on the 7th of February, made public the details of the deal on his X-account and a cursory look indicates that Kashmir’s Economy would be amongst, if not at the top, of the worst hit. Read with the 2nd February declaration of President Trump, following facts vis-à-vis Kashmir emerge:
* India has agreed to reduce tariff on imports on industrial goods, food and agricultural products to zero percent. These include tree nuts, fresh and processed fruits and ‘additional’ products.
* The United States would impose a ‘reciprocal’ tariff rate of 18 percent on exports from India. These include textiles, apparel and artisanal products.
* India also ‘agrees to address long-standing non-tariff barriers to the trade in U.S. Food and Agricultural products.
* The United States affirms that it intends to take into consideration, during the negotiations of the BTA (Bilateral Trade Agreement), India’s request that the United States continue to work to lower tariffs on Indian goods.
To understand the impact of waiver of duty to zero, we need to take a look at the previous history of this business of apples. Till 2019, US paid a duty of 50 percent on export of apples to India. As a retaliatory measure for Washington increasing tariffs on Indian steel and aluminium products, India in the year 2019 imposed an additional 20 percent duty on US apples and walnuts, and Rs 20 per kg on almonds in 2019 on top of the existing 50 percent duty.
India agreed to remove additional duty of 20 percent on US apples when Prime Minister Modi visited the US in June, 2023 under one of the six World Trade Organisation disputes India and US resolved. In response to protests by farmers of Himachal Pradesh and Kashmir, Piyush Goyal had then waxed eloquent that there is no duty reduction on apples and only the retaliatory 20 percent duty had been removed. On the contrary he went on to state, the government had imposed a minimum import price of Rs 50 per kg on imports of apples from all countries except Bhutan. The rationale given by Piyush Goyal was that “…this will ensure that no one can flood Indian markets and hurt our farmers.” It was reiterated that ‘there is no reduction in the MFN duty on apples, walnuts and almonds, which still applies to all imported products, including US-origin products. The Minimum Import Price (MIP) of Rs 50 per kg for apples from the US and other countries (excluding Bhutan) was imposed to protect domestic farmers from flooding and ‘predatory pricing’. The government maintained that the 50 percent duty and MIP are sufficient to protect the domestic farmers. It is not yet clear whether the MIP would still remain in operation after the new Trade Deal and would that be enough to protect the domestic farmers.
Given the fact that apple imports from other countries would still attract 50 percent duty, the United States would therefore exclusively control the Indian apple market. In other words, otherwise referred to as a monopoly.
Domestic growers have pointed out the fact that only 7-8 tonnes of apples per hectare can be produced in India whereas, in comparison 40-70 tonnes per hectare are produced in countries like the US, Iran, New Zealand and China owing to better geography, advanced technology and mechanisation. As per press reports, on 4th of February, much before the details of the Trade Deal were made public, reading economic devastation in President Trumps message, Himachal Pradesh apple growers have already called for a mass agitation.
The necessity of protection for domestic farmers can be well gauged from a study of the impact of the 20 percent retaliatory duty on US apples from it’s imposition in 2019 till 2023, when it was lifted. It had a significant impact on trade dynamics, shifting market share away from the US towards other nations. The fall was so drastic that import of US apples fell from a whopping 1,27,908 tons in 2018-19 to 4,486 tons in 2022-23. The annual import of apples from the world has been stable in the vicinity of 239-305 million USD, estimated to be around 5 lakh tons and projected to be 6 lac tons. During the period 2019-2023, the dominant US market share was devoured by other countries like Turkey, Italy, Chile, Iran, and New Zealand which is reflected in the fact that import of apples from countries other than US increased from 160 million USD in 2018-19 to 290 million USD in 2022-23.
With an annual yield ranging between 25 – 28 lac tons, India is the 7th largest producer of apples and approximately 80 percent of this yield comes from Kashmir. The industry, with its direct and indirect ventures, is Kashmir’s largest employment generator, providing 400 man-days of work per year per hectare or orchards, employing 3.5 million people and contributing 8 percent to our GSDP in 2023-24.
The waiver of duty on US apples would not only wipe out all other countries from the Indian markets but eventually poses an existential threat to our domestic farmers. In effect, the move has the potential of handing over an annual market of 30 to 35 tons to the United States and President Trump has ensured that farmer income would not only double but multiply many times over. I do not see how our farmers would compete with the industrialised advanced farmers of the United States. They are 200 years ahead. So far, there is nothing to protect them from predatory pricing and flooding of markets.
Now, coming to imposition of tariff on export of Carpets which stood at 2.90 percent till recently before retaliatory duties of 25 percent plus 25 percent penal duties took it to 52.90 percent. Unlike India, which not only removed retaliatory duty of 20 percent on apples imposed in 2019 but completely waived off the original duty of 50 percent, the United States has chosen to retain the duty at a whopping 18 percent, which is more than six-times of what it originally was. To top it, it has been termed as ‘reciprocal tariff rate’. To my mind, only the President of the United States who announced the deal or the President of the Kashmir Chamber of Commerce and Industry who welcomed it would be in a position to explain the reciprocity of the deal and how a whopping six-fold increase to 18 percent could be termed as a landmark step that would ‘enhance global competitiveness of Indian products, particularly Kashmir. By this logic, the higher the tariff, the more competitive we become. By welcoming the 18 percent tariff rate, the Kashmir Chamber of Commerce and Industry has also closed the doors for negotiating for a reduction/waiver of tariffs for products of Kashmir, the distressed state of our economy they were duty bound to watch over and protect.
It reminds me of some lines from Malcolm-X’s interview of March, 1964, one year before his assassination, where in response to a question about things progressing in the United States, he says “No, no, I will never say that progress is being made. If you stick a knife in my back nine inches and pull it out six inches, there’s no progress. If you pull it out all the way that’s not progress. Progress is healing the wound that the blow made. And they haven’t even pulled the knife out much less healed the wound. They won’t even admit the knife is there….”
The least our Kashmir Chamber of Commerce could have done was to acknowledge the existence of the knife of 18 percent tariff on our products and worked for its removal. It could have opposed the waiver of duties on US apples, walnuts and almonds and brought to the notice of the powers they please that it would have devastating consequences for our farmers and others dependent on this vital industry. The devastation of apple crop due to the closure of roads during the 2025 floods and the consequent throwing of apples on the roads, ditches and waterbodies is a sight the pain of which no Kashmir could ever forget. The impact of the Trade Deal on another critical sector of agriculture is so far ambiguous.
It is time that the Kashmir Chamber of Commerce and Industry understood the fact that the body is the most important watchdog of economic interests of Kashmiri’s and not lapdogs whose premature yelping and silence on critical economic and social issues over the years has only resulted in irreparably hurting the interests of Kashmir.
(The author is Former Senior Vice President, Kashmir Chamber of Commerce and Industry.)
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