Budget 2022 : Assocham seeks review of FTA terms, increase in custom duty to support fruit based value chain

The Associated Chambers of Commerce and Industry of India (Assocham) has sought reviewing the terms of the Free Trade Agreements (FTAs) and enhancement of the custom duties on import of fruit/vegetable pulps and concentrates to provide support to the Indian fruit based value chain.

Assocham recommended that the terms of FTA should be reviewed so as to prevent import of pulps & concentrates manufactured in 3rd country at nil / preferential rate of duty.

It also said that FTA benefits should be granted only  local value addition norms stipulated in Rules of Origin to be revised upward to at least 80 percent to ensure that contracting countries are not used as gateways by 3rd party third countries in order to enjoy preferential duty treatment.

It also recommended that customs duty on import of all fruit/vegetable pulps and concentrates should be enhanced substantially to levels prevailing for commodities like coffee and tea which are at 100 percent.

As per Assocham's pre budget 2022-23 memorandum, despite Indian being the second largest producer of the fruits and vegetables, Indian farmers do not get adequate returns for their labour and investment towards the production of fruits and vegetables.

According to the Ministry of Food Processing Industries that over Rs. 40,000 crores of the fruit and vegetable production by Indian farmers goes waste and only 2 percent of the fruit production gets processed.

It added that lack of demand for Indian farmers produce is due to lack of adequate cold chain infrastructure to store, transport and process fruits and vegetables.

"It is also due to the import of fruit based products manufactured in neighbouring countries at preferential and/or nil rate of import duty under Trade Treaty arrangements," Assocham said.

It also noted that there is a employment potential of 6.5 million man days in the fruit based value chain but this potential is impeded as a significant portion of fruit juices and fruit based beverages in India is imported from countries to whom India has extended preferential duty treatment on account of bilateral and multilateral trade treaties.