All India Cashew Association voices concern over surge in illegal import of the dry fruit

The concern raised by the All India Cashew Association regarding the surge in illegal cashew kernel imports is a multi-faceted issue with significant implications for India's economy, trade policy, and domestic agricultural sector. India has historically been one of the world's largest producers, processors, and consumers of cashew, playing a pivotal role in the global cashew trade. The country's cashew industry, concentrated in states like Kerala, Karnataka, Goa, Maharashtra, Odisha, and Andhra Pradesh, supports millions of livelihoods, from farmers cultivating raw cashews to workers in processing units.

Historically, India primarily imported raw cashews for processing and then exported the kernels. However, over the past few decades, there has been a shift, with countries like Vietnam emerging as major players in both raw cashew production and processing. This global dynamic sets the stage for the current problem. The core issue, as highlighted by the All India Cashew Association, is the flooding of the domestic market with illegally imported cashew kernels, primarily from Vietnam and various African countries. The most alarming aspect of this issue is the alleged misuse of Special Economic Zones (SEZs) to channel these imports. SEZs are designated areas intended to promote exports by offering tax incentives and duty-free import of raw materials for processing, provided the finished goods are re-exported. The alleged modus operandi involves importing cashew kernels duty-free into SEZs, ostensibly for export, but then diverting them into the Domestic Tariff Area (DTA) without paying the requisite customs duties and taxes.

Several key stakeholders are involved in this complex scenario. Firstly, the **All India Cashew Association (AICA)**, representing domestic processors and traders, is the primary voice raising these concerns. Their members face unfair competition due to the cheaper, duty-evading imports, leading to reduced demand for domestically processed kernels and price depression. Secondly, **domestic cashew farmers and processing unit workers** are directly impacted. A decline in demand for domestic produce and processed kernels threatens their livelihoods and the viability of their businesses. Thirdly, the **Government of India**, through bodies like the Ministry of Commerce and Industry, the Directorate General of Foreign Trade (DGFT), and the Customs Department, is a crucial stakeholder. They are responsible for formulating and enforcing trade policies, regulating SEZs, and preventing smuggling. Their efficacy in controlling such illegal trade is under scrutiny. Lastly, the **importers and traders** involved in this illegal network benefit from circumventing duties, while legitimate importers and the broader consumer base are also indirectly affected.

This issue matters significantly for India on several fronts. Economically, it leads to substantial **revenue loss for the government** in terms of evaded customs duties, impacting public finances. More critically, it **undermines the domestic cashew industry**, which is a vital agro-processing sector. The influx of cheap, illegally imported kernels makes domestically processed cashews uncompetitive, leading to potential factory closures, job losses, and economic distress in cashew-growing regions. This directly contradicts the government's 'Make in India' and 'Atmanirbhar Bharat' initiatives, which aim to boost domestic manufacturing and self-reliance. From a governance perspective, the alleged misuse of SEZs highlights potential loopholes in existing regulations and enforcement mechanisms, raising questions about the integrity and effectiveness of these special economic zones in achieving their intended objectives. It also creates an unfair playing field, discouraging legitimate businesses and potentially fostering a black market.

Historically, India has grappled with challenges in protecting its domestic agricultural and processing industries from unfair foreign competition, whether through legal imports or illegal channels. The **Foreign Trade (Development and Regulation) Act, 1992**, provides the legal framework for governing imports and exports, empowering the DGFT to formulate and implement trade policy. The **Customs Act, 1962**, is central to preventing smuggling and collecting duties, while the **Special Economic Zones Act, 2005**, and its rules govern the functioning of SEZs, explicitly outlining the conditions for duty-free imports and provisions for diversion into the DTA with duty payment. The alleged misuse directly violates these provisions. Furthermore, the issue touches upon constitutional principles related to trade and taxation. While **Article 301** guarantees freedom of trade, commerce, and intercourse throughout India, this freedom is subject to reasonable restrictions and the need for fair competition. The evasion of customs duties directly impacts **Article 265**, which states that no tax shall be levied or collected except by authority of law.

The future implications are critical. If left unchecked, the illegal imports could severely cripple India's cashew industry, leading to a permanent shift in processing capacity away from India. This would result in significant job losses, particularly for women who form a large part of the processing workforce, and a decline in rural incomes. The government will likely need to enhance surveillance, tighten enforcement at ports and SEZ boundaries, and review SEZ regulations to prevent such diversions. There might also be a need for diplomatic engagement with source countries to address the origin of these illegal consignments. For the consumer, while cheaper cashews might be appealing in the short term, the long-term decline of the domestic industry could lead to dependency on imports, potentially affecting quality control and price stability in the future. This situation underscores the constant challenge of balancing trade liberalization with the protection of domestic industries and livelihoods, a delicate act for any developing economy.