Friday 26 August 2011

Impose anti-dumping duty on Chinese apples to protect Himachal, Uttarakhand Apple producers: HP Assembly

Written by Anil Singh

The hill state of Uttarakhand would have taken an altogether different growth curve, in every sphere, be it the welfare of the people, agriculture, tourism and business; if it had made the neighboring Himachal Pradesh as its role model; right at the time of its formation.

But instead of following Himachal Pradesh even remotely; the state of Uttarakhand charted a totally different line. Unlike HP, Uttarakhand never let significant restriction in land buying for non-domiciles, never formulated a farmer centric agriculture/horticulture policy (meant protectionism, marketing hubs) and is now contemplating removing domicile restriction for educational admissions and jobs, altogether.

But since a state Government is sovereign to a significant extent with respect to formulating new welfare policies for its people and repealing disadvantageous ones, Uttarakhand can mend its ways even now.

Taking its people welfare centric thought a step further, the Himachal assembly yesterday unanimously adopted a private members bill that impresses upon the Union government to impose anti-dumping duty on apples being imported from China.

To understand the importance of the bill, here is a bit about anti-dumping duty.

In economics, "dumping" refers to any kind of predatory pricing, especially in the context of international trade, when manufacturers in a country start exporting a product to another country at a price either below the price charged in its home market or in quantities that cannot be explained through normal market competition.

Sometimes, what happens is, a commodity coming from another country is priced so low by the foreign country and is sent in such big quantities that the indigenous producers in the commodity receiving country just can’t compete with the foreign commodity. In short, the indigenous producer just can’t make the retailer pick their produce rather than the imported one. In such circumstances, Governments impose a duty, which increases the price of the imported commodity in the host market; and hence brings price parity between the imported and indigenously produced commodity. This duty is called Anti-dumping duty and the step taken by host country is called protectionism.

Under Free Trade, it’s normally considered wrong to impose anti dumping duty.

But the Himachal Government found that the low prices at which Apples are coming from China (the price of Chinese apple in Indian markets was Rs 39 per Kg, US apple was Rs 51 per Kg and New Zealand apple was Rs 57 per Kg); along with the quantities China is putting in India; the imported apple has become a threat to the economy of growers in the state.

Provisions for imposing anti-dumping duty existed under WTO rules and the Centre needed to ask for restricting imports of the fruit and save the hill farmers from the unfair trade practices being resorted to.

Taking into consideration the welfare of about 1.60 lakh farmers in the state, that are dependent upon the fruit crop, the state Government along with the opposition Congress have unanimously adopted a private members bill that impresses upon the Union government to impose anti-dumping duty on apples being imported from China. Although the Congress legislators have not contacted the centre in official capacity; they in their individual capacity had taken up the matter with the Centre.

Rather than the opposition take up the matter with the Centre in individual capacity; the state government is trying for a unanimous resolution of the state assembly; to make the demand more effective.

The Himachal Pradesh Assembly sought constitution of an expert committee to make a case raising import duty on apples, and for getting the fruit declared a special category product that needed state intervention for being shielded from dumping by other countries. The house is unanimous on the fact that it was unfair to compare cost of productivity of European or other countries’ apple with that of produced in Himachal Pradesh, Jammu & Kashmir or Uttarakhand. Substantiating their assertion, the house said in unison that whereas the fruit was grown on flat lands in competing nations, in the Indian hill states, the Himalayan topography presented many challenges, which the farmers needed to overcome to have a sustainable livelihood out of the activity.

Notably, the NDA government at centre led by Atal Bihari Vajpayee in 1999-2004 (BJP and allies) had raised import duty on apples and saved a large section of the hill farming community, when a similar situation arose during its tenure.

During the discussion, the legislatures brought to house’s notice that the imports of Chinese apple was rising steadily since the year 2006’ with apples worth Rs 500 crore in each year were imported in 2009-10 and 2010-11.

The Himachal Pradesh government had taken up the case for raising import duty on Chinese apple with Union commerce minister Anand Sharma and agriculture minister Sharad Pawar.


Protectionist measures can be criticized in the spirit of free trade; but industries and businesses do need variable protection, until they develop their feet to stand on their own. That’s why, Governments give tax holidays to new companies. Agriculture and horticulture are risky businesses in states like Himanchal Pradesh, Jammu and Kashmir and Uttarakhand; for reasons viz difficult terrain, small land holdings etc. Hence protectionism of some sort can be easily justified.

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