India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

During 2006–08, <strong>India</strong>’s imports <strong>of</strong> fruit averaged $195 million annually; dates, figs, <strong>and</strong>
apples accounted for about three-quarters <strong>of</strong> this amount. Of these three, the United
States exports only apples to <strong>India</strong>, consisting mostly <strong>of</strong> the Red Delicious variety from
Washington state. Apples accounted for 4 percent <strong>of</strong> <strong>India</strong>n agricultural imports from the
United States during 2006–08. 31 Although facing strong competition from Fuji apples
from China, <strong>India</strong>n dem<strong>and</strong> for U.S. apples has grown in recent years, increasing from
$2.5 million in 2004 to about $20 million in 2008. 32
<strong>India</strong> imported wheat in 2006 following shortfalls in domestic production <strong>and</strong> problems
pertaining to domestic procurement. 33 Imports were encouraged by lowering tariffs <strong>and</strong>
easing phytosantiary barriers. 34 During 2006–08, wheat imports averaged $333 million,
sourced mostly from Russia, Canada, <strong>and</strong> Argentina. As discussed in chapter 6, certain
SPS trade measures prevented the import <strong>of</strong> U.S. wheat. Even without these measures,
however, U.S. wheat exports to <strong>India</strong> may have faced competition from other suppliers
on the basis <strong>of</strong> delivery price.
Imports by Major Trading Partner
In terms <strong>of</strong> major suppliers, Association <strong>of</strong> Southeast Asian Nations (ASEAN) countries
accounted for 35 percent <strong>of</strong> <strong>India</strong>n agricultural imports during 2006–08. Indonesia, a
major supplier <strong>of</strong> palm oil, was by far the largest supplier, accounting for close to onequarter
<strong>of</strong> <strong>India</strong>n imports during this period (table 2.2 <strong>and</strong> fig. 2.5). Other leading
ASEAN suppliers were Burma (dry beans) <strong>and</strong> Malaysia (palm oil, certain cocoa
products), accounting for 7 percent <strong>and</strong> 4 percent <strong>of</strong> total <strong>India</strong>n agricultural imports,
respectively. During this period, imports <strong>of</strong> soybean oil from Argentina fell sharply, from
$661 million to $222 million, as <strong>India</strong> sourced more competitively priced palm oil from
Indonesia. These losses were somewhat <strong>of</strong>fset by Argentine exports <strong>of</strong> wheat as <strong>India</strong>
resumed importing in 2006 after several years <strong>of</strong> being a net wheat exporter. 35 During
2006–08, the EU-27 supplied a wide range <strong>of</strong> products, led by alcoholic beverages
(mostly whiskies), peas, fibers (wool <strong>and</strong> flax), <strong>and</strong> hides <strong>and</strong> skins. <strong>India</strong>n agricultural
imports from Canada increased sharply during 2003–08, such that by 2008, Canada
became the second-largest agricultural supplier behind Indonesia. Canada’s exports to
<strong>India</strong> were almost exclusively peas <strong>and</strong> lentils.
Exports
The competitiveness <strong>of</strong> <strong>India</strong>n agricultural exports is based on low costs associated with
abundant labor <strong>and</strong> subsidized inputs, including fertilizer, electricity, <strong>and</strong> seeds. 36 <strong>India</strong>’s
proximity to ASEAN <strong>and</strong> Middle Eastern markets provides <strong>India</strong> with a transportation
cost advantage over other suppliers. Other factors affecting <strong>India</strong>n agricultural exports
31 Industry representative, interview by Commission staff, New Delhi, <strong>India</strong>, May 27, 2009.
32 Although apples can be supplied more cheaply by China <strong>and</strong> Chile, U.S. Red Delicious apples are
considered to have superior color <strong>and</strong> shape <strong>and</strong>, when available out <strong>of</strong> season, can comm<strong>and</strong> a price
premium. Industry representative, interview by Commission staff, Mumbai, <strong>India</strong>, June 1, 2009.
33 Govindan, <strong>India</strong>: Grain <strong>and</strong> Feed, February 21, 2007.
34 Industry representative, interview by Commission staff, New Delhi, <strong>India</strong>, June 2, 2009.
35 Govindan, <strong>India</strong>: Grain <strong>and</strong> Feed, February 20, 2008.
36 Eighty percent <strong>of</strong> <strong>India</strong>n agricultural production is reportedly competitive in world markets. Industry
representative, interview by Commission staff, New Delhi, <strong>India</strong>, June 4, 2009.
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