New India Apple Import Restriction to Affect Iran and Benefits Other Suppliers

On May 8, 2023, the Indian government imposed a ban on the import of apples that cost less than 50 Rs/kg on a CIF basis, which is equivalent to approximately USD 0.61/ kg. The Directorate General of Foreign Trade announced the decision to prohibit apple imports whose cost is higher than the one suggested, including insurance and freight. The trade measure has come based on a recommendation from the Indian Agriculture Ministry as an effort to limit access to the Indian market for suppliers of cheap apples. The ban will affect shipments from Iran, the UAE, and Afghanistan, where apples are estimated to be valued under the new cost restrictions.

According to ITC Trade Map, India imported 392 thousand mt of fresh apples with a value of USD 320 million in 2022, which makes India the fifth largest importer of apples behind Germany, the UK, Egypt, and Indonesia. Therefore, India is a significant buyer of apples from different key apple-producing countries. In 2022, about 60% of all of India’s apple imports were supplied by Türkiye, Italy, Iran, Chile, and New Zealand, with a few other relatively low imports coming from large suppliers, South Africa, Poland, and Brazil.

Source: Tridge

The Indian government’s decision will affect Iran the most. Iran and Türkiye have been extremely successful in the Indian market recently, constantly increasing their market share since 2019. In Q1-23, imports of apples from Iran rose by 168% YoY compared to Q1-22. Türkiye's growth has been even more substantial, with 224% YoY over the same period. The main reason for Türkiye and Iran's domination in the market is their competitive pricing of fresh apples. In MY 2021/22, the average import price of fresh apples was USD 0.83/kg from Turkiye and USD 0.50/kg from Iran, well below the average price of USD 1.1/kg from the US or USD 0.98/kg from New Zealand.

India’s import restrictive measures could be understood as a direct suspension of Iranian apples, as Iran is the only important supplier that provides apples under the USD 1.61/kg cost limit. The UAE, Afghanistan, and Myanmar could also have their apple imports to India suspended. However, these countries have a marginal volume of imported apples to India.

According to the statistics released by the Islamic Republic of Iran Customs Administration, a total of 62.5 thousand mt of fresh and dried apples worth USD 215 million were exported from Iran in the 2022/23 campaign that ended in March, registering a 36% decline compared with the year before. At the same time, import data from April 2022 to February 2023 shows that India has reduced its apple imports from Iran in value to USD 26 million, a 50% decrease from the same period the year before. Within the same period, Türkiye accounted for the largest share of the imports, with USD 72 million, followed by Chile, with USD 38.6 million, and Italy, with USD 34 million.

With fewer Iranian apples in the Indian market, there are more trade opportunities for apple suppliers with a competitive price over the price restriction. The effect on domestic apple prices in India due to the import restriction can already be seen. The wholesale price of Indian apples in the Uttar Pradesh market rose 30% WoW to USD 1.35/kg in Week 19. Higher domestic demand and lesser supply from Iran led to the price increase.

Apple imports will remain significant for Indian consumption as acreage does not rise and demand grows. Despite strong apple harvests in India, there has been no considerable increase in the volume of Indian apples due to area limitations. As a result, the restriction could support apple suppliers from Türkiye and Poland to India, as these are the next leaders in price competitiveness after Iran. Turkish and Polish apples were imported to India in 2022 at an average price of USD 0.75 to 0.85/kg. Accordingly, they do not fall under the new restrictions.

It is expected that apple prices in the Indian market will remain high in the near term. The disruption in Indian apple production, coupled with the constrained supply of imported apples, will continue to influence market dynamics and keep prices elevated.