Indian cashew companies to set up units in Vietnam and Africa

KOCHI: Indian cashew companies are looking to set up processing factories in Vietnam and Africa, lured by the incentives doled out by the governments, cheaper availability of raw materials and labour.

India is a major importer of raw cashew nuts for processing and export of cashew kernels, which surpassed Rs 4,300 crore last year.

If Vietnam had emerged as a cheaper processing destination for some time now, it is the turn of the African countries now. "The governments in Africa are providing all support to promote the cashew industry there. This, more than any other factor, is attracting Indian companies,'' said Harikrishnan R Nair, chairman, Cashew Export Promotion Council of India.

The African countries have formed 'African Cashew Alliance' to promote the cashew industry in the continent. The alliance had its annual session in September at Benin, which was attended by many Indian cashew processors and exporters, exploring the possibility of setting up facilities there.

Olam Agro is a cashew nut processing and exporting company in India that has operations in Tanzania , Mozambique, Ivory Coast and Nigeria.

"Easy access to raw materials is the key to our operations as it helps cut the cost. Import of raw nuts from Africa is the major source of supply of cashew nuts in India," said R Narayanan, chief executive of the company.

India's total cashew nut supply is calculated to be around 14 lakh tonne, of which the share of local production is said to have dropped below 50%.

Africa now produces 45% of the world cashews. Recently, Guinea Bissau cut the cashew export tax by 61% to help the farmers who were hit by the political unrest. Kenya, Tanzania and Mozambique have formed a co-operative framework to promote cashew business in the eastern region.

Cheaper availability of land and labour has been another significant factor. "The daily wage is half of Rs 400 - we give in Kerala - and the productivity is higher. Average productivity is 30 kg per person compared with 17 kg here," said MA Abdul Salam, proprietor of South Kerala Cashew Exports.

Chennai-based Rajkumar Impex is a big company that has operations in Vietnam. It processes 200 tonne cashew nuts per day. High prices of imported raw nuts from Africa have often put the Indian processor-exporter in a fix especially when the export prices drop or rupee-dollar rates fluctuate.

Setting up units in Africa can, to a large extent, cut the transportation and other costs. "That could be the reason why Indian companies are keen to set up units abroad," said Nair.

Source: India Times