New Delhi, September 13, 2023 – In a significant move, the Ministry of Commerce & Industry of India has resolved multiple trade disputes with the United States through Mutually Agreed Solutions, marking a significant development in bilateral trade relations between the two countries. As a result of this resolution, India has withdrawn additional duties on eight US origin products, including apples, walnuts, and almonds.
Trade Dispute with the US
Background: Trade Tensions and Additional Duties
The trade tensions between India and the US escalated in 2019 when India imposed additional duties on select US-origin products. These additional duties, amounting to 20% each on apples and walnuts and Rs 20 per kg on almonds, were imposed as retaliation against the US’s protective measures, which included increased tariffs on certain steel and aluminum products.
Resolution Brings Relief to US Apple, Walnut, and Almond Exporters
With this resolution, the additional duties on US-origin products have been lifted, providing much-needed relief to American exporters. It is important to note that while these additional duties have been removed, the Most Favoured Nation (MFN) duty remains unchanged. Apples, walnuts, and almonds from the United States are still subject to MFN duties of 50%, 100%, and Rs 100 per kg, respectively.
Minimum Import Price (MIP) for Apples
Additionally, the Directorate General of Foreign Trade (DGFT) introduced an amendment to the import policy for apples. Under this amendment, a Minimum Import Price (MIP) of Rs 50 per kg has been applied for apple imports from all countries except Bhutan. This measure aims to safeguard against the influx of low-quality apples and predatory pricing in the Indian market, benefiting both consumers and domestic producers.
No Negative Impact on Domestic Producers
Contrary to concerns, the removal of additional retaliatory duties and the introduction of MIP for apples will not adversely affect domestic apple, walnut, and almond producers. Instead, it is expected to foster healthy competition in the premium market segment for these products. This competition will ultimately result in better quality and competitive prices for Indian consumers.
Restoring Competitiveness in the Market
The imposition of additional retaliatory duties had caused the market share of US apples to decline as other countries seized the opportunity. Notably, apple imports from countries other than the US increased from US$ 160 million in FY 2018-19 to US$ 290 million in FY 2022-23. Countries such as Turkey, Italy, Chile, Iran, and New Zealand emerged as prominent apple exporters to India, effectively occupying the market share once held by the United States.
Similarly, in the case of walnuts, imports surged from US$ 35.11 million in FY 2018-19 to US$ 53.95 million in FY 2022-23, with Chile and the United Arab Emirates becoming the largest exporters to India. For almonds, India has been highly dependent on imports, with imports of approximately 233 thousand MT in the last three years compared to domestic production of only 11 thousand MT.
Conclusion
The resolution of trade disputes between India and the United States is a positive development for international trade and bilateral relations. It allows US apples, walnuts, and almonds to compete on an even playing field with products from other countries. This decision is expected to enhance product quality, promote competitive pricing, and benefit Indian consumers.
Key facts About Trade Dispute with the US:
📌 India withdraws additional duties on US-origin products:
- In June 2023, India decided to resolve six outstanding WTO disputes with the US, leading to the withdrawal of additional duties on eight US origin products, including apples, walnuts, and almonds.
📌 Background of additional duties:
- In 2019, India imposed additional duties of 20% each on apples and walnuts and Rs 20 per kg on almonds in retaliation to the US increasing tariffs on certain steel and aluminum products.
📌 Most Favoured Nation (MFN) duty status:
- The MFN duty of 50% and 100% continues to be applicable on US apples and walnuts, while US almonds still have an MFN rate of Rs 100/kg.
📌 Protection against low-quality imports:
- An amendment in import policy for apples was made, applying a Minimum Import Price (MIP) of Rs 50 per kg for imports from all countries except Bhutan. This measure aims to protect against low-quality apple imports and predatory pricing.
📌 Impact on domestic producers:
- The removal of additional duties is not expected to negatively impact domestic apple, walnut, and almond producers. It will promote competition in the premium market segment, benefiting Indian consumers.
📌 Changes in market share:
- The market share of US apples and walnuts declined as other countries increased their exports to India due to additional retaliatory duties. Turkey, Italy, Chile, Iran, and New Zealand became prominent apple exporters to India. Similarly, Chile and UAE became the largest walnut exporters to India.
Frequently Asked Questions (FAQs)- Trade Dispute with the US
- What were the additional duties imposed by India on US-origin products in 2019? India imposed additional duties of 20% each on apples and walnuts and Rs 20 per kg on almonds as a retaliation against the US’s increased tariffs on certain steel and aluminum products.
- Has the Most Favoured Nation (MFN) duty on US apples, walnuts, and almonds changed? No, the MFN duty on these products remains the same, with rates of 50%, 100%, and Rs 100 per kg, respectively.
- What is the Minimum Import Price (MIP) for apples introduced by DGFT? DGFT introduced a Minimum Import Price (MIP) of Rs 50 per kg for apple imports from all countries except Bhutan to prevent low-quality apples and predatory pricing.
- How did the market share of US apples change due to additional retaliatory duties? The market share of US apples declined as other countries increased their exports to India. Countries like Turkey, Italy, Chile, Iran, and New Zealand became prominent apple exporters to India.
- What is the expected impact of the resolution on domestic producers? The resolution is not expected to negatively impact domestic apple, walnut, and almond producers. Instead, it is likely to foster competition, leading to better quality and competitive prices for Indian consumers.
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