Indian Walnut Market Faces Disruption Amid Major Duty Evasion Scandal

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The Indian walnut market is currently under intense scrutiny following a major customs scandal at Nhava Sheva Port, threatening the stability of walnut supplies and highlighting the persistent vulnerabilities in the country’s import verification systems. Customs officials recently detained a container ship suspected of concealing at least 46 containers of Chinese walnuts, misdeclared as Afghan to exploit the zero-duty regime under the South Asian Free Trade Agreement (SAFTA).

This operation, uncovered with intelligence from the Department of Revenue Intelligence (DRI), uncovered an alleged duty evasion of around ₹50 crore, with authorities arresting one individual and imposing extensive vessel detainment. The probe sheds light on deeper structural issues: India’s 100% tariff on walnuts from China, the US, and Chile protects domestic growers but creates a substantial incentive for fraudulent documentation, especially when global kernel yields are higher for imported walnuts than for local ones. This incident not only disrupts immediate walnut flows but signals a likely tightening of import regulations, potentially affecting pricing and availability in the domestic market for months to come.

📈 Walnut Prices & Market Sentiment

Origin Type Location FOB Price (EUR/kg) Weekly Change Sentiment
China Light Quarter Dalian 3.35 0 Neutral
China Light Amber Pieces (8–12 mm) Dalian 2.30 0 Neutral
China Light Broken (4–8 mm) Dalian 2.95 0 Neutral
China Light Pieces (8–12 mm) Dalian 2.85 0 Neutral
US Light Halves (Organic, 80%) London 4.60 0 Stable
India Light Halves (Organic) New Delhi 5.40 0 Firm

🌍 Supply & Demand Dynamics

  • Import Disruption: Detention of 310-container vessel disrupts short-term supply for major Indian buyers.
  • Origin Preferences: US and Chilean walnuts offer higher yields (450–500g/piece) versus local (around 350g), fueling demand for imports.
  • Price Gap: Kashmir (US$4.20–5.40/kg in-shell), US (US$6.70/kg), Chile (US$8.40/kg)—incentivizing traders to find tariff workarounds.
  • Customs Crackdown: Expect tightened checks, possible delays, and increased due diligence for future walnut and dry fruit imports.

📊 Market Fundamentals & External Influences

  • Policy Intervention: India’s 100% import duty for non-Afghan origins, zero-duty under SAFTA for Afghanistan.
  • Fraud Incentives: Routes via Iran, Gulf ports, forged documentation artificially give Chinese/other walnuts Afghan origin.
  • Parallel Practice: Similar schemes seen in arecanut, black cardamom, and garlic imports, so dry fruit scrutiny may extend beyond walnuts.
  • Trade Rivalry: Industry tips by rival traders contributed to enforcement action.

🌦️ Weather/Harvest Outlook

  • Kashmir Region: Current weather is stable; no major anomalies expected for walnut crop in the coming weeks.
  • Global Supply: No significant adverse weather reported in California or Chile, meaning global supply reliability is strong—however, Indian import restrictions may be the primary bottleneck.

🌏 Global Production & Trade Comparison

  • India: Major consumer, smaller exporter. Highly sensitive to import flows due to protective tariffs.
  • US & Chile: Large producers of high-yield walnuts, but shut out of Indian market unless duties are evaded or quotas eased.
  • China: Significant supplier for Indian demand, but now under scrutiny after misdeclaration scandal.

📆 Trading & Strategic Outlook

  • Expect short-term turbulence for traders relying on SAFTA-based imports or transhipment routes.
  • Heightened regulatory checks may delay shipments and add risk premiums to non-verified origins.
  • Indian domestic prices likely to stay elevated until import flow normalizes—local kernels remain at premium levels (FOB New Delhi: €5.40/kg).
  • Importers should pre-verify documents, expect longer lead times, and consider spot purchases to mitigate supply risks.
  • Monitor for further government announcements or importer blacklistings stemming from probe.

⏳ 3-Day Regional Price Forecast

Exchange/Location Product Forecast Price (EUR/kg)
Dalian, CN Walnut kernels, Light Quarter 3.30 – 3.40
London, GB US Organic Light Halves 4.55 – 4.65
New Delhi, IN Indian Organic Light Halves 5.35 – 5.45