Indian Cashew Processors Focus on Mechanization and Supply Chain Growth

In an interaction with Industry Outlook, HozefaJawadwala, Founder and CEO of Aelea Commodities, discusses how Indian cashew processors are diversifying sourcing, adopting sustainability, embracing mechanization, and ensuring food safety to boost competitiveness. He highlights how rising global demand is pushing Indian processors toward traceability and quality certifications. With over two decades of global experience across Agri Commodities, FMCG, Cement, and Banking, Hozefa has led multi-country operations, fund-raising, and strategic initiatives at OLAM International, ED&F MAN, and Tata International. He brings deep expertise in financial management and commodity trading.

With India continuing to import over half of its raw cashew needs, how are processors responding to rising global prices, and what domestic sourcing trends are emerging in 2025? 

India, being one of the largest consumers of cashew kernels, relies heavily on imports to meet its demand, with over 50% of its requirements being fulfilled through imports, primarily from Africa. In response to rising global prices, Indian processors are taking various measures: 

Adapting to Global Price Fluctuations: After a year of low global raw cashew nut production and rising prices, the current year's good crop yield has led to a correction in raw cashew prices, which are expected to stabilize in the next 45-60 days.  

Diversifying Sourcing: Indian processors are exploring non-traditional origins like Cambodia, Vietnam, and Thailand to reduce dependence on traditional suppliers and ensure a stable supply chain.  

Sustainable Sourcing and Processing: Sustainability has become a necessity, and Indian processors are focusing on sustainable sourcing and processing practices to ensure long-term viability and meet growing demand for responsibly sourced products. 

In terms of domestic sourcing trends:

Government Initiatives: The Indian government and state governments have launched initiatives to improve cashew production and reduce dependence on imports. These initiatives include the development of new varieties and other measures to increase crop availability. 

Emerging Results: While the effects of these initiatives will take time to materialize, some results are expected in the next 3-5 years. 

Industry Consolidation: The cashew processing industry is witnessing consolidation, with larger plants increasing their capacity and smaller plants facing challenges. The shift from mechanical processing to mechanization is also a notable trend. 

Overall, Indian processors are responding to rising global prices by adapting to market fluctuations, diversifying their sourcing, and prioritizing sustainability. Domestic sourcing trends are focused on improving production and reducing dependence on imports through government initiatives and industry consolidation. 

What operational and financial bottlenecks are limiting small and mid-sized raw cashew processors in India from scaling up or modernizing their processing capabilities? 

The small and mid-sized cashew processors in India face significant operational and financial bottlenecks which hinder their ability to scale up or modernize their facilities. The challenges include labour constraint. The industry's traditional reliance on labor-intensive processes poses challenges particularly in regions outside of Southern India and Odisha where generations of families have been involved in cashew processing. Securing the right quality and quantity of labour is difficult especially in North India.  While mechanization can improve efficiency and reduce labour costs it requires substantial capital expenditure on modern machinery. This can be a significant barrier for small and mid-sized processors. The Indian cashew industry lacks standardization in grading raw cashews and finished kernels. This non-standardization makes it difficult for financial institutions to fund raw and finished goods leading to high margins and limited access to finance. The Indian cashew industry lacks a supportive ecosystem including formal aggregator’s standardized collection and storage facilities and markets for farmers and processors. This void allows middlemen to exploit farmers further exacerbating the challenges faced by processors. Small-scale cashew processors struggle to access finance from banks hindering their ability to invest in modern equipment technology and working capital. This limited access to finance restricts their growth and competitiveness.

How is the lack of mechanization in key processing stages, like shelling and peeling, and impacting productivity, labour dependence, and final kernel yield in Indian units? 

Lack of mechanization in the key processing stages like shelling and peeling impact significantly on productivity, labour dependence and final kernel yield. Productivity about lack of mechanization hinders the processor to achieve the economics of scale and hence increases the cost of production. This makes Indian processors uncompetitive in the world market for Export a Vietnamese processor. Labour dependence, and lack of mechanization means the processor must depend on labour and right skilled labour of huge poll. To increase processing the processor has to invest on the training and development for the right quality of labour. Final kernel yield and lack of mechanization and high dependence on labour mean not having standardized product and inconsistent kernel quality. Due to this non-standardization our kernel lacks acceptability.

Given the increasing global demand for traceability and food safety, how are Indian cashew processors aligning their practices with export market compliance in 2025? 

To increase global market share, Indian cashew processors have to focus heavily on sustainability, food safety, quality, traceability, and developing value-added cashew-based products. Indian processors recognize sustainability as a necessity, prioritizing initiatives like water conservation, waste management, and renewable energy adoption. Companies like Aelea are leading the way, with 60% of their energy requirements coming from solar power and a focus on circular economy principles. By converting waste to energy and utilizing by-products, processors can reduce their environmental footprint and create economic value. To cater to the world market, food safety, quality, and traceability are of prime importance. Some of the Indian processors, who are in the mechanization process, have implemented stringent food safety processes and defined quality control. The processor can go for Indian certification like FSSC 22000 and various international certifications to gain marketability in the world market. The processor needs to develop innovative healthy products using cashew as a prime ingredient, which will cater to the evolving global and domestic demand.

What role do state governments and cluster-based processing policies play in addressing the regional imbalances and inefficiencies in India’s raw cashew supply chain? 

State governments and cluster-based processing policies play an important role in improving efficiencies in the cashew processing in India and reduce regional imbalances. 

Improving productivity: the processor can take advantage of the government scheme for mechanization and this will lead to economies of scale and reduce the processing cost. 

Developing eco system: The cluster-based processing policies not only bring economies of scale of operation but also develop other related eco system such as warehousing facility, collection centers, road connectivity, availability of required power, water.  

Reduces regional imbalances: cluster-based policy will create ecosystem and promote cashew processing in areas with high production potentials, reduce transportation cost and create local employment. 

Industry- Government collaboration: Associations and boards at the state and central levels play a vital role in working closely with governments and agencies to promote healthy growth of the industry.  These associations provide valuable inputs to governments, helping to improve productivity, quality, and market access for cashew farmers and processors. Examples of successful initiatives include state boards of cashew working to enhance productivity, quality, and market access, as well as promoting Indian cashews in the global market  

As global players invest in automation and origin-based processing, what strategic shifts must Indian cashew processors embrace to remain competitive and future-ready by 2030? 

To remain a significant player in the global market, the industry needs to work cohesively in many fronts such as: 

Crop Development: Need to invest in R&D for the crop development for early fruit, yield and resistance to pest and any epidemic. 

Developing local ecosystem: Government and the industry need to collaborate for developing ecosystem such as crop collection point, community drying facilities for farmers. 

Improve supply chain: As we are one of the largest consumers of Cashew kernel we may have to depend upon Africa and other origins for raw cashew nut. The ocean freight and other logistics cost are very high comparison to Vietnam. The industry needs to work closely with the shipping line for ocean freight, for direct sailing to Indian ports.