Under-invoiced Imports Hurting Local Livelihoods, says J&K Walnut Industry

Exporters and traders of walnuts from Jammu and Kashmir, the country's major walnut growing region, have claimed that imports of the premium nut, particularly from Chile, were under-invoiced in order to avoid the 100% import duty imposed to protect local producers.

Representatives of the Kashmir walnut industry, including exporters and the small-scale sector, have called for the imposition of a quantity-based tax on walnut imports, similar to the one imposed on almonds, to prevent traders from undervaluing the product, which "suppresses domestic prices" and harms local industry and producers.

In separate petitions to the Prime Minister, Finance Minister, and Commerce Secretary, the J&K Walnut Exporters' Association and the Birpur Small Scale Industries Association stated that the Centre's well-intended move of imposing a 100% import duty on walnuts to protect local producers and marginal workers from the unfair price advantages enjoyed by large scale farmers in other countries had not worked due to rampant under-invoicing.

"The massive import of undervalued walnuts into Indian markets has smashed and depressed local walnut prices." "As the prices of local produce fall, the livelihood of the population involved in walnut cultivation suffers," the petitions stated.

The associations emphasized the importance of imposing a quantity-based import tax on walnuts, as has been done for almonds, so that there is no room for tax evasion through under-valuation.

Under-invoicing not only allows dishonest importers to sell cheaply, but it also deprives the government of genuine import duty revenue that would have been collected if imports occurred at the fair internationally prevailing rates, according to industry.

In comparison to the internationally prevailing rates of more than $3.80 per kg, walnuts are imported at $1.30 per kg, avoiding 100% duty on the remaining $2.50 per kg, which amounts to Rs 200 per kg, according to the representations.

"At this rate, the estimated revenue loss from the import of 1,800 containers weighing 18,000 kg each will be Rs 648 crore." Furthermore, it reduces GST collections by Rs 10 per kg, which works out to Rs 32.5 crore for 1,800 containers, 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 effect is multiplied by more than twice when walnut kernels are obtained by cracking walnuts.

Under-invoicing by importers lowers prices, making the realization value for Kashmir farmers very low, according to industry organisations. "If this continues, there will be no incentive for these small farmers to start new plantations, and the trade will eventually dry up," the petitions stated. According to government figures, 2.82 lakh tonnes of walnuts were grown in India in 2021-22. J&K supplied approximately 92% of the produce.