India's Demand for Chilean Apples Spikes

As a highly anticipated growing market for fresh fruits, India has positioned itself as a market with large potential for exporters with its increasing economic prosperity. Apples, in particular, have been the center of attention for imports, as it fulfills the need for fresh fruits while being easy to store, an important factor for countries that lack cold chain development. And since India’s additional import tariffs on US apples from its original tariff of 50%, other markets, such as Chile, have appeared more attractive.

US Apples Falls Back, Chile Steps In

According to the Centre for the Promotion for Exports (CBI) 60% of India’s fresh fruit imports are composed of Washington Apples due to its ease of storability. Imports of apples have doubled since the past decade from 122K tons to 215K tons, of which the US was consistently the main supplier. The US maintained its presence within the Indian apple market despite the tariff, which according to research from Cambridge University Press, was due to consumers holding a higher reputation for fruits from the US than other markets.

The US is, no doubt, a powerful market for apples, being one of the top producers as well as exporters, recording USD 855 million in fresh apple exports in 2020. However, it has not managed to grab a trade agreement with India to ease the exportation of the goods like other major producers have, such as India’s step towards a bilateral agreement with New Zealand in 2016, or India’s preferential trade agreement with Chile and Mercosur. The lack of establishing any agreement to further trade relationships could hurt US exports in the future, with New Zealand and Chile quickly expanding their exports to India over recent years. Even more so, India applied an additional 20% retaliatory tariff to US imports in June 2019, putting the country at even more of a disadvantage.

In light of India’s tense relationship with the US, Chile has become a highly in-demand market for apple imports. According to industry sources, imports have surged due to Chile’s comparably lower price than the US and its satisfactory quality. In addition, the recent outbreak of the coronavirus has also stirred a health-craze, causing apples to become more sought after. As represented in Chart 1, the export quantity of Chilean apples to India in 2021 April YoY was an increase of a staggering 117%. Of the exported apples, most of it was the Royal Gala variety.

Chart 1. Quantity of Apples Exported from Chile to India

Source: Custom Service of Chile.

The Future of Chilean Apples in the Indian Market

Chile is expected to hold a growing position within the Indian market, with the country’s consistently increasing demand for more fresh fruits and vegetables as income levels rise, and more channels of sales appear. The rapid urbanization and digitalization of the Indian economy have allowed the expansion of supermarkets, as well as e-commerce, to drive the demand for fresh fruit imports, even in smaller cities (CBI). The coronavirus outbreak and the subsequent lockdown had hindered imports, but as the majority of top-earning consumers reside in large cities, these consumers are less likely to be impacted by economic fluctuations, and their purchasing habits for food are not likely to change.

Sources:

• CBI. "Developments in India's fresh fruits and vegetables market."
• Cambridge University Press. The Indian Demand for Imported Fresh Apples: Effects of Tariff Reductions."