Buoyed by tariff removal, US walnut industry aims to crack India's market

India had imposed customs tariffs on 28 American products in June 2019 in retaliation to the US' move. It raised the import duty on American walnuts from 30% to a whopping 120%

India's decision to remove retaliatory customs tariffs on some US products, including walnuts, has cheered up the California walnut industry, which is hopeful that the move will help it increase its exports to India and further firm up trade ties between the two strategic allies.

Two days ahead of US President Joe Biden's visit to New Delhi to attend the G20 Summit on September 9-10, India dropped the retaliatory customs duties on about half a dozen US goods which were imposed in 2019 after America hiked its tariffs on certain steel and aluminium products coming from India.

Welcoming India's decision, Pamela Graviet, Senior Director, Global Programmes, California Walnut Commission and Board, said it is a "positive step" that will improve bilateral trade relations.

"Recently, the Indian government and the United States have been in discussions about mutually beneficial things, not just agriculture, but also across a wide variety of subjects. And, it was determined to remove a 20 per cent retaliatory tariff," she told PTI.

"I think when countries talk, and they have a positive dialogue, it's beneficial, and that trickles down to something like walnuts," she said.

India had imposed customs tariffs on 28 American products in June 2019 in retaliation to the US' move. It raised the import duty on American walnuts from 30 per cent to a whopping 120 per cent.

During Prime Minister Narendra Modi's first state visit to the US in June, both India and America decided to terminate six WTO (World Trade Organisation) disputes and also remove the retaliatory tariffs on some US products.

As part of the agreement, India dropped additional duty on chickpeas (10 per cent), lentils (20 per cent), almonds fresh or dried (Rs 7 per kg), almonds shelled (Rs 20 per kg), walnuts (20 per cent), and apples fresh (20 per cent).

"So, the 20 per cent retaliatory tariff is gone, but the 100 per cent remains for walnuts coming from the US, Chile, or anywhere," Graviet said.

"We would like to see it go back to what it was, which is 30 per cent. It makes the product more affordable for the local population. The other thing is India imports walnuts in the shell. And in the store, you buy them either in the shell, or it's the kernels. When you find kernels, those are done within India. So, it is also job creation. When you have affordability for a product, we hope that also has more job creation locally," she said.

The extra 20 per cent in tariff meant that it changed the price of California walnuts, Graviet said, adding that this is the reason there are more Chilean walnuts available in the Indian markets right now.

But now that we both pay the same tariff level, we expect over the next couple of years that it will even out, that you will be able to find pretty much equal amounts of walnuts from California and Chile...You can buy local, produced in India, you can buy Chilean and you can buy what comes from California, she said here on Friday.

Everything that comes into India, that is not produced in India has the same tariff level of 100 per cent. The government is still looking out for local producers, but also allowing importation of walnuts on a fair level playing field, Graviet said.

Asked if she was hopeful that the Indian government will further bring down the import duties on walnuts, she said, "It's the government's decision. What's best for their population, we will work with that."

She said the market for walnuts in India is huge and the consumption is growing and is yet to reach its peak.

The US is the largest trading partner of India. In 2022-23, the bilateral goods trade increased to USD 128.8 billion against USD 119.5 billion in 2021-22.

The exports of California walnuts to India declined from nearly 19,000 metric tonnes in 2020 to just 6,500 metric tonnes last year, largely because of high tariffs coupled with Covid-19, which disrupted global supply chains.

California walnuts account for 99 per cent of the commercial US supply and nearly 50 per cent of the world trade. Germany is the top export market, followed by the Middle East and Turkiye.