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  • A ‘foreign’ threat to cashew industry

    Apr 25th, 2019

    The crisis-hit cashew industry now seems to be in the clutches of another serious threat — the inflow of broken kernels from countries such as Vietnam, Ivory Coast, and Mozambique misdeclared as animal feed, agricultural rejects, and broken roasted cashew. The consignments that reach Indian ports under the harmonised system nomenclature (HSN) code 23063020 (residues and waste from the food industries and prepared animal fodder) are then re-wrapped and released into the market, leaving genuine processors in jeopardy. Apart from the loss due to tax evasion, this unrestricted practice can soon sound the death knell for an already crippled industry.

    R.K. Bhoodesh, Chairman, Cashew Export Promotion Council of India (CEPCI), says the inflow started during early 2018, which then caught the attention of the Central Board of Indirect Taxes and Customs (CBIC). “In February and March alone around 20 consignments were seized and a penalty of ₹86 lakh was imposed. Then it ended for a while, but later they switched operations from Mundra Port to Visakhapatnam Port,” he says.

    Remains in factories

    According to processors, huge volumes of product have been stuck in factories since the imported kernels started flooding the market. “In all cashew exporting countries 30% to 40% of the total product will end up as broken cashew, which has no demand in the international market. But in India we consume it as food ingredient and our industry is dependent on this strong domestic market. But now plain broken cashew declared as animal feed or roasted kernel is entering the market skipping import duty.”

    Earlier, China used to be a big consumer of broken cashew kernels from Vietnam. But after they imposed certain restrictions, India became the major target market and they started importing plain broken cashew declaring it as roasted.

    Processors say there is a powerful lobby of big exporters and multinational companies at work. “They have been using the loopholes in Free Trade Agreement (FTA) and we think we will have to shut down our businesses if this continues,” they say.

    The authorities say though the Customs and Directorate of Revenue Intelligence (DRI) are acting vigorously, they are still unable to curb it completely.

    The CEPCI proposes mandatory sampling and testing of all cashew kernel consignments along with implementing 100% risk management system (RMS) scrutiny.

    “Last week around 41 consignments were detained at Visakhapatnam Port and now we have brought this to the attention of the Prime Minister’s Office. Another proposal is allowing only one point of entry for better monitoring,” says Mr.