A Bit Too Spicy

Kochi, Aug 19 | Updated: Aug 20 2004, 05:30am hrs
Take care of the micros and the macros will take care of themselves. From Vasco Da Gamas time, Indian spices have been hot. Will Kamal Nath manage to keep them that way

Spice exporters in the South are reeling under the impact of duty-free imports of spices from the Saarc countries. Though the free trade agreement signed with Sri Lanka is supposed to provide duty-free access only to Sri Lankan pepper, in reality sizeable imports of pepper of non-Sri Lankan origin find their way to India. Ram Kumar Menon, president of the All-India Spice Exporters Forum, says the solution lies in a cap on pepper imports from Sri Lanka similar to the one on tea.

Its not just pepper, and the route isnt only through the Palk Straits. Cardamom is another commodity of which cheap varieties are coming into India from faraway Guatemala through Nepal-based firms.

Cloves are completely alien to Pakistani soil. Yet, as spice exporters lament, it is not uncommon to find cloves coming in from Pakistan. This kind of misuse of free trade agreements must be checked by the DGFT if domestic business is not to be completely destroyed, says an understandably agitated Mr Menon.

What are the other concerns spice exporters would like to see addressed in the National Foreign Trade Policy For one, theyd like a repeal of the amendment to the advanced licence scheme (ALS) effected on November 21, 2003. The ALS in its original form allowed exporters to import inputs duty- free up to a certain value to fulfill an export obligation. There was no limit on the number of inputs one could import using one licence as long as the licenced value was not exceeded. There were also no restrictions on the number of items that could be exported under a single licence to meet the export obligation.

However, under the new dispensation, only a single import and a single export is permissible under one licence. This has brought business to a standstill for several exporters, says Mr Menon. Often there are small export orders for which entrepreneurs have to import small volumes of raw material. This becomes impossible under the new dispensation.

It is impractical for exporters to seek a separate licence for every import or export. Yet today they have no choice but to go in for a large number of additional licences. Inevitably, this raises transaction costs and adds to cumbersome documentation, he adds.

Meanwhile, the agriculture ministry notification of November 18, 2003 on the new plant quarantine regulations has added to importers woes. Under the new regime, import permits issued by the plant quarantine authority have been made mandatory. Once again, this means more documentation. What is worse, though the imported material requires a phytosanitary certificate of the exporting country, certain materials like turmeric, white pepper and basil do not fall under the schedule of the notification and have to get pest risk analysis from the Plant Protection Quarantine and Storage Lab at Faridabad.

One can well imagine the problems the importer in Kochi faces to get a certificate every time there is an import, says Mr Menon. The solution is simple: the domestic plant quarantine offices spread across the country could be empowered to do the certification.