<p></p> <p>The cashew industry is passing through difficult times following increase in processing costs. This is mainly on account of a rise in the price of raw cashew nuts, both indigenous and imported and a sharp increase in wages in Kerala, where the industry is mainly concentrated. This has resulted in the Indian kernel becoming uncompetitive in the world market. In turn, exports have witnessed a sharp fall so far this fiscal year. <br></p> <p>Sundaran Prabha, Chairman, Cashew Export Promotion Council of India (CEPCI), spoke to BusinessLine about the problems and remedial measures needed. Excerpts: </p><b></b><p><b>What is the present status of the Indian cashew industry</b>? </p> <p>India is the largest importer of Raw Cashew Nuts (RCN) in the world, having imported 9.39 lakh tons (lt) in 2014-15. <br></p> <p>We are the largest processor also in the world and our dependence on imported RCN has so far been perpetual. <br></p> <p>The installed processing capacity in India is about 25 lt of RCN per annum and with mechanisation taking place in a big way in non-traditional processing areas, this is going up rapidly. <br></p> <p>However, the capacities in the traditional and organised sector, particularly in Kerala, remain stagnant. The capacity utilisation, which was around 65 per cent in 2014-15, is now much lower. <br></p> <p>Domestic consumption continues to be high at around 2.50 lakh tons per annum. <br></p> <p>Exports of cashew kernels were at 1.30 lt in 2014-15, but this is now showing a sharp downward trend, with a 25 per cent decline in the year to month figures for 2015-16 in volume. <br></p> <p>The trade deficit for 2014-15 on cashew was about ₹1,000 crore. Now, due to the non-parity because of high RCN prices and high processing costs, about 85 per cent of the processing units in Kerala are in a state of closure. <br></p> <b>What are the problems faced by the industry</b>?<p>The high price of RCN is due to unfair practices adopted by traders, who take advantage of the 0 per cent import duty. These traders have no stake in the industry. <br></p> <p>There is no level playing ground for the processors due to the high cost of production, inadequate support/incentives from the State/Central governments, high cost of funds, stagnant overseas markets due to recession, and competition from Vietnam and other processing countries who were traditionally suppliers of RCN to India. <br></p> <p><b>Do you think mechanisation can improve productivity and make us competitive in the world market</b>?</p> <p>Yes. Mechanisation will definitely lead to increased productivity and streamline cost of production to match our competitors’ levels. Of course, a higher scale of production will render our products more competitive. <br></p> <p><b>Then why hasn’t the industry resorted to mechanisation</b>?</p> <p>Heavy investment is required. Then there is the high cost of finance and inadequate level of support by way of incentives from the State/Central governments. <br></p> <p>What is the total domestic market demand per annum and what is the share of the organised sector? <br></p> <p>Domestic demand for cashew kernels is estimated to be about 2.5 lt per annum and this is on the rise. <br></p> <p>The share of the organised sector in the domestic market is 50 per cent. <br></p> <p>What is the demand growth for kernels per annum in the domestic market and the world market? <br></p> <p>Demand growth in world market is about 6 per cent, driven mainly by new markets and by increasing awareness about the health benefits. <br></p> <p>In the domestic market, it is estimated to be 12.3 per cent every year. <br></p> <p>What is the annual requirement of raw nuts by the industry and how much is available indigenously? <br></p> <p>The annual requirement of RCN by the industry is about 25 lt (based on installed capacity) and it is increasing. <br></p> <p>Of the total requirement, less than one-third (8 lakh tons) comes from domestic production, according to published statistics. <br></p> <p>The industry, however, estimates that domestic production is only about 5.5 lakh tons per annum. <br></p> <p>Is it economical to import RCN and who are the major suppliers of RCN to the Indian industry? <br></p> <p>Due to inadequate domestic production of RCN, the industry has to depend on imports also, though the prices in both cases are comparable. <br></p> <p>The major suppliers of RCN are Tanzania, Ivory Coast, Benin, Guinea Bissau, Ghana, Senegal, Gambia, Burkina Faso, Nigeria, Indonesia, etc. <br></p> <p><b>Are kernels imported? If so, how and why</b>?</p> <p>Yes. Though import of cashew kernels has been curtailed over the last few years, imports still continue from competitor countries that have no other market for broken cashew kernels. <br></p> <p>The import duty for cashew kernels, which is at 45 per cent, has to be increased to 70 per cent to curtail such imports. <br></p> <p>Though the minimum import price fixed by the government two years back was adequate to curtail imports at the then prevailing market rates, the same is not effective today as the market has gone up. <br></p> <p>Hence, there is a need for the duty to be increased to 70 per cent, which is the maximum allowable in line with the law.<br></p>