Indian cashew players grappling with volatile prices, competition: ICRA

Despite growth in global demand, Indian cashew kernel exports have been declining in the last five years, driven by intense competition from Vietnam, ratings agency ICRA said in a report.

While the Indian cashew exports recorded a marginal decline at a CAGR of 3% between CY2012 and CY2017, exports from Vietnam grew at a CAGR of 10% during the same period. Lower cost of production, aided by a higher degree of mechanisation and cheaper labour, have aided Vietnamese processors to become more competitive in the global market.

An ICRA note says that the increasing market share of the Vietnamese processors and consequent pressure on realisations has adversely impacted the credit profile of the Indian exporters, whose revenues and profitability have declined in the recent years.

“In the recent years, Vietnam has been gaining share at India’s expense in the export market, and the growth of the Indian processors is largely restricted to the domestic market. The Government has protected domestic industry by way of 45% import duty on cashew kernels which has supported higher domestic price and; resulting in Indian processors focusing increasingly on the domestic market,” said R Srinivasan, Assistant Vice President and Head, Mid-Corporate ratings, ICRA Ltd.

In terms of output, the world cashew kernel production, led by Vietnam and India, grew at a modest annual growth rate of 4% over the last five years driven by growing retail consumption by major consumers such as India, Europe and North America.

India has registered a stronger growth than rest of the world, and continues to be the largest market for cashew kernels by far, supported by its usage in traditional sweets and snacks. Despite elevated price levels in the recent years, cashew kernel demand has sustained and the growth trend in both domestic and global demand is expected to continue going forward.

“Efforts by the Indian processors to increase the level of mechanisation and improve the cost structure would also benefit the industry over the medium term,” added Nikhil Mathew, ICRA’s senior analyst, corporate ratings.

Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at

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