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  • Import duty on raw cashew to hit processing sector

    Mar 4th, 2016

    The Karnataka Cashew Manufacturers’ Association (KCMA) has said that the 5 per cent customs duty on raw cashew nut in the Budget will sound a death knell for the cashew processing industry in the country.

    In a letter to the Union Finance Minister Arun Jaitely, KCMA has sought the immediate roll back of this duty.

    B Rahul Kamath, President of KCMA, said that the levy of 5 per cent basic customs duty on the CIF (cost, insurance and freight) value on the imported raw cashew nuts will translate to `30 a kg of finished goods. Along with this, it will also attract a special additional duty of 4 per cent and an education cess of 3 per cent. This will mean an additional increase in cost of the product by 25/kg.

    Processors hit

    This additional cost cannot be passed on to consumers as the product is price-sensitive and will hit consumption directly, he said.

    Stating that a majority of the 4,000 cashew processing units in 14 States of the country are in micro, small and medium scale sectors, Kamath said most of them are located in the rural belt. The industry is currently employing over 4 lakh women across India and another 4 lakh indirectly in the farms.

    The cashew industry in the country has the annual processing capacity of 16 lakh tons of cashew.

    Domestic production

    He said that farmers in the country produce around 6 lakh tons of raw cashew, and the domestic production is able to meet the processing demand for four months. The rest has to be made good by imports.

    He said the shortfall in the Indian raw cahsew nuts have already pushed the international prices to disparity for India and additional costs to the extent of the duty and other charges will seal the fate of small domestic processors. This will result in the closure of many tiny and small industries, he said.