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The imposition of a 25% tariff on Indian products by the United States, spearheaded by former President Donald Trump, is poised to significantly impact the export of makhana (fox nuts) from Bihar, India. This development presents a multifaceted challenge for the region, which contributes over 25% of India's total makhana exports. The previously existing import duty of 3.5% has now surged to 25% as of August 1st, creating a considerable hurdle for exporters. Satyajit Kumar Singh, a makhana exporter, highlights Bihar's prominent role in fox nut exports. India's annual makhana exports amount to approximately 2,000 tonnes, valued at around $30 million (Rs 240 crore), destined for the United States and other international markets. In 2024 alone, Bihar contributed a substantial 600 tonnes to India's makhana exports to the US. The increasing popularity of makhana, dubbed a "superfood" due to its health benefits, has allowed it to compete with local alternatives like walnuts and almonds in the US market. The implementation of the 25% tariff threatens to disrupt this positive trajectory. The increased tariff is expected to raise landed costs, potentially diminishing the competitiveness of Indian makhana in a price-sensitive market. However, Singh suggests that Indian makhana's attributes, such as its clean-label nature, plant-based origin, and sustainable sourcing, could still render it attractive to consumers. He emphasizes the importance of enhanced FDA compliance, origin-based branding, traceability, and value-added innovation for exporters to navigate this challenge successfully. If managed effectively, this external challenge could serve as a catalyst for makhana to establish itself as a premium superfood in the US market. The anticipated consequence of the 25% tariff is a substantial increase in makhana prices in the US, where it currently retails for approximately Rs 8,000/kg. There's a prevailing expectation that US importers will seek a 25% price reduction from Indian exporters, which could create difficulties for Indian businesses. As a result, Indian exporters may be compelled to explore alternative markets for their products. Aside from the US, Nepal and the UAE are significant importers of makhana from India. Experts estimate that over 85% of India's makhana production originates in Bihar. Despite this, Punjab and Assam are the leading exporters due to the absence of a well-developed food processing industry and adequate export infrastructure, such as cargo facilities, in Bihar. Industry experts also note that Bihar exports other agricultural products, including Basmati rice, mangoes, and litchis, to Europe and the Gulf countries. The new tariff policy poses a risk to all these exports.
The ramifications of this tariff extend beyond mere financial considerations; they touch upon the livelihoods of farmers, processors, and exporters involved in the makhana industry in Bihar. Makhana cultivation is a labor-intensive process, often undertaken by smallholder farmers who rely on this crop for their income. A significant reduction in export demand could lead to decreased prices at the farm gate, impacting the economic well-being of these farmers. Furthermore, the lack of robust processing infrastructure in Bihar exacerbates the problem. The absence of modern processing facilities means that a considerable portion of the makhana produced in the state is exported in raw or semi-processed form, limiting the value addition within the state. This situation also puts Bihar at a disadvantage compared to states like Punjab and Assam, which have better-equipped processing industries and can therefore capture a larger share of the export market. The need for improved infrastructure in Bihar is critical to support the growth of the makhana industry and enhance its competitiveness in the global market. This includes investments in food processing units, cold storage facilities, and efficient transportation networks. A well-developed infrastructure would enable Bihar to process more of its makhana locally, add value to the product, and ultimately increase its export earnings. Moreover, the government can play a proactive role in promoting the makhana industry through various initiatives, such as providing subsidies for processing equipment, offering training programs for farmers and processors, and facilitating access to credit and finance. These measures would help to strengthen the industry and enable it to withstand external shocks like the imposition of tariffs. Diversification of export markets is another important strategy for mitigating the impact of the US tariff. While the US is a significant importer of Indian makhana, it is not the only market available. Exporters should actively explore opportunities in other countries, particularly in Europe, the Middle East, and Southeast Asia, where there is growing demand for healthy and nutritious food products like makhana. This diversification would reduce the industry's reliance on a single market and make it more resilient to changes in trade policies.
To navigate the challenges posed by the tariff, Indian makhana exporters must adopt a proactive and strategic approach. This involves a multifaceted strategy that focuses on enhancing product quality, strengthening branding and marketing efforts, and improving supply chain efficiency. One of the key priorities should be to ensure strict compliance with FDA regulations in the US. This includes adhering to food safety standards, labeling requirements, and other regulations that govern the import of food products. By demonstrating a commitment to quality and safety, Indian exporters can build trust with US consumers and retailers and maintain their market share. In addition to FDA compliance, origin-based branding is crucial for differentiating Indian makhana from its competitors. This involves highlighting the unique characteristics of makhana from Bihar, such as its traditional cultivation methods, its nutritional benefits, and its cultural significance. By creating a strong brand identity, Indian exporters can command a premium price for their products and build a loyal customer base. Traceability is another important aspect of building consumer confidence. Consumers are increasingly concerned about the origin and safety of the food they eat. By implementing robust traceability systems, Indian exporters can provide consumers with detailed information about the source of their makhana, the processing methods used, and the quality control measures in place. This transparency can help to build trust and differentiate Indian makhana from other products in the market. Value-added innovation is also essential for enhancing the competitiveness of Indian makhana. This involves developing new and innovative products that cater to the evolving tastes and preferences of consumers. For example, Indian exporters could explore opportunities to create flavored makhana snacks, makhana-based breakfast cereals, or makhana ingredients for use in other food products. By diversifying their product offerings, Indian exporters can attract new customers and increase their market share. Ultimately, the success of the Indian makhana industry in navigating the challenges posed by the US tariff will depend on its ability to adapt, innovate, and compete effectively in the global market. By focusing on quality, branding, traceability, and value-added innovation, Indian exporters can overcome these challenges and secure a bright future for the industry.