In anticipation of the US reciprocal tariffs regime set for April 2, 2025, discussions are underway regarding the potential reduction or elimination of import duties on American agricultural products, including walnuts, almonds, and apples. This tariff adjustment is expected to influence the economy of Jammu and Kashmir (J&K), where these crops contribute substantially.
The concentration of production in J&K is notable, with the region accounting for 98% of India's walnut production, 92% of its almond production, and 75% of its apple production. Changes in tariff policy could significantly impact the local economy, as American imports may become more appealing, posing challenges for local growers in maintaining market share and price premiums.
Currently, domestic producers benefit from protective import duties: almonds face tariffs between 42% and 120%, apples at 50%, and walnuts between 100% and 120%. These duties will higher until 2023. The imposition of a 20% retaliatory tariff saw US apple imports plummet from $120 million in 2017 to under $1 million by 2023, illustrating the sensitivity of imports to tariff changes. The removal of these tariffs led to a ten-fold increase in US apple exports from $4.8 million in 2022 to $50-$80 million in 2024. Similarly, US walnut exports reached $70 million in 2024.
The removal of retaliatory tariffs before the 2023 G20 New Delhi Leaders' Summit expanded the market for US produce, with US almond exports to India surpassing USD 1 billion in 2024. The potential reduction or elimination of import duties on these products could lead to a decline in domestic prices and demand, challenging J&K's horticultural sector, which supports over 7 lakh families and contributes significantly to the local economy.
The sector faces the need for competitiveness in a global market. A proactive policy response is required, focusing on short-term stabilization measures and long-term structural solutions. Short-term measures could include addressing transport pricing, improving transparency, and implementing a market intervention scheme to stabilize prices. Long-term strategies might involve financial intermediation, risk mitigation, and technology upgrades.
Introducing futures markets for these commodities could aid in price discovery and risk management, benefiting local growers. Addressing non-tariff barriers, such as quality and packaging issues, and implementing blockchain-based traceability solutions could enhance transparency and trust in the supply chain. These initiatives could support the sector in navigating global market challenges.
Source: Greater Kashmir