J&K Apple Sector Faces Headwinds Amid Reduced Import Duties Under Trade Deals

Why in the News?

Apple traders and political leaders in Jammu and Kashmir have expressed concern over reduced import duties on apples from the United States and the European Union under recent trade agreements.

They argue that lower tariffs could undermine the region’s horticulture sector, which forms the backbone of its rural economy.

Background of the Trade Decisions

US Apple Imports

India has reduced the basic customs duty on apples imported from the United States from 50% to 25%, while imposing a Minimum Import Price (MIP) of ₹80 per kilogram.

EU Apple Imports

Under the India–EU trade framework:

• Import duty on fresh fruits has been reduced to 20%.
• A Tariff Rate Quota (TRQ) system has been introduced.
• Initially, 50,000 tonnes per year of apples will be allowed at the concessional rate.
• The quota will gradually increase to 1,00,000 tonnes over 10 years.

Political leaders in J&K have termed these moves potentially harmful to domestic orchardists.

Importance of Apple Production in J&K

Apple cultivation is central to the region’s economy. According to the J&K Economic Survey 2025–26:

• Apples constitute nearly 50% of total horticulture output.
• The horticulture sector generates approximately ₹10,000 crore in revenue.
• Around 35 lakh individuals are directly or indirectly employed.
• Nearly seven lakh families depend on horticulture.

In 2024, J&K produced around 21 lakh metric tonnes of apples, contributing over 70% of India’s total apple output.

This makes the region the backbone of India’s apple supply chain.

Structural Challenges Faced by J&K Orchardists

1. Small and Fragmented Landholdings

• Average orchard size in J&K: 0.40 hectares.
• In countries like the US, New Zealand, and EU states: average farms exceed 50 hectares.

Fragmentation limits mechanisation and economies of scale.

2. Lower Productivity

India produces about 7–8 tonnes per hectare, compared to:

• 40–70 tonnes per hectare in the US, Iran, New Zealand, and China.

Higher productivity abroad is driven by:

• Mechanised farming.
• Advanced pruning and harvesting techniques.
• AI-based farm systems.
• Superior climate conditions.

3. Variety and Quality Gap

Popular global varieties like Gala apples are well established in Western markets.

Though India has recently introduced Gala cultivation, issues remain regarding:

• Yield consistency.
• Colour and visual appeal.
• Taste and shape standardisation.

This creates a perception gap in quality when compared to imports.

Impact on Cold Storage and Off-Season Prices

J&K has invested heavily in controlled-atmosphere (CA) cold storage infrastructure to stabilise prices.

• 397.08 lakh metric tonnes of apples are stored.
• 92 cold storage units operate in the region.

Reduced import duties may allow fresh apples from countries like New Zealand to enter the Indian market at competitive prices during the off-season.

Possible consequences:

• Reduced profitability of stored apples.
• Cold storage investments becoming economically unviable.
• Distress sales by farmers.
• Collapse of price-stabilisation mechanisms developed over years.

Political and Policy Demands

Political leaders and trade bodies in J&K have urged the Centre to:

• Re-evaluate trade agreements.
• Consider excluding apples from tariff concessions.
• Expand high-density apple cultivation (currently limited to 30,000 kanals out of 30 lakh kanals).
• Provide interest-free loans under the Holistic Agriculture Development Programme (HADP).
• Expand CA storage capacity.
• Operationalise dry port projects to improve export logistics.

They argue that without improvements in productivity and quality, local producers cannot compete effectively.

Broader Economic and Policy Implications

Trade-Off in Trade Policy

• Lower tariffs benefit consumers through reduced prices.
• Domestic producers face increased competitive pressure.

Competitiveness Imperative

The debate highlights the need for:

• Technological upgradation.

• Farm consolidation.
• AI-enabled precision horticulture.
• Improved grading, branding, and packaging.
• Supply chain modernisation.

Federal Concerns

The issue reflects tension between national trade diplomacy and regional economic interests.

Significance

For J&K Economy-Apple cultivation supports livelihoods, rural income, and social stability.

For Agricultural Reform-Trade exposure could push productivity improvements but may cause short-term distress.

For Consumer Welfare-Lower prices could benefit urban consumers.

For Trade Strategy-India must balance market access commitments with safeguards for sensitive sectors.

Way Forward

1. Phased Liberalisation with Safeguards – Use TRQ ceilings and MIP effectively.
2. Productivity Enhancement – Expand high-density plantations and mechanisation.
3. Value Chain Integration – Invest in branding, export diversification, and food processing.
4. Targeted Financial Support – Interest subvention and infrastructure subsidies.
5. Market Intelligence Systems – Real-time price monitoring to prevent import shocks.