| Date: |
11-07-2015 |
| Subject: |
Duty-free California almonds entering via barter trade route at LoC hurt local importers |
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NEW DELHI: India's growing appetite for almonds has unwittingly gifted a bonanza to Pakistan.
Duty-free California almonds are flooding Indian homes through the barter trade route at the line of control (LoC) in Kashmir, denting the country's revenues and trade through the normal channel. The battle between traders operating in the normal route and the privileged one is now about to reach Supreme Court, with a lobby representing domestic importers gearing up to file a public interest litigation. "We are approaching the Supreme Court...The government needs to urgently address this situation," said Arpesh Garg, president of Agro Importers Association. India and Pakistan had in 2008, as part of confidence building mechanism, allowed duty-free trade in select goods on barter basis along the LoC in Jammu and Kashmir.
Trade through this route was intended to be restricted to goods and products produced and manufactured locally in the Kashmir region. However, large Californian almonds, which do not have occasional bitterness found in local almonds, have gained popularity in the country in the past few years and begun to make way through this route.
India imported $600 million worth of almonds in 2014-15, almost double the $316 million worth of imports in 2010-11. The increasing barter trade has irked the traders using the normal import channel while causing substantial revenue loss to India.
"This policy was in no way meant to allow backdoor and dutyfree trade of items which are not produced in the Kashmir region, or which are imported from other third countries. The object of the policy was never to create any parallel duty-free border between India and Pakistan," Garg said.
The shelled almonds face import duty of Rs 22 per kg in Pakistan, compared to Rs 90 per kg in India, presenting an attractive arbitrage opportunity for traders on both sides of the border.
The association, in a petition to the finance and commerce ministries, has alleged that the proposition has become more attractive with traders even resorting to misdeclaration of the value as $1 per kg instead of the actual price of $11 per kg, lowering the total duty outgo. J&K government's move to reduce VAT to nil from VAT of about Rs 50 per kg in other states has further sweetened the deal for traders. "A legitimate trader suffers a disadvantage of about Rs 140 per kg compared to the smugglers for shelled almonds," according to the representation.
The commerce department had written to the finance ministry recently, seeking reduction in customs duty on almonds but the ministry is yet to take a call on it.
Source : economictimes.indiatimes.com
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