EOUs oppose Centres pepper subsidy move

Kochi, Jan 4 | Updated: Jan 5 2006, 06:22am hrs
Two exporting units have challenged the Centres decision to keep 100% export oriented units (EOU) and SEZ units in the special economic zones (SEZ) out of the pepper export subsidy scheme aimed at helping export of material of Indian origin.

Cochin Spices functioning in the SEZ and AVT McCormick have moved the Kerala high court stating that denying them the right to claim subsidy was unlawful and all exporters needed to be treated equally. They said that they were also sourcing material domestically and through exports were contributing to help the cause of Indian pepper.

The Centre which has sought time to file its reply had formulated a WTO- compatible transportation subsidy scheme for pepper to boost exports. A subsidy of Rs 2 per kg for inland transport and Rs 5 for international freight was announced from Oct 27, 2005 to March 31, 2006. The scheme would cover export of 20,000 tonnes and the Spices Board had been empowered to implement it and take necessary steps to confirm the authenticity of the origin.

The ministry had while approving the scheme kept EOUs and SEZ units out as they could import without payment of duty. Since imported pepper and indigenous pepper were handled at the same unit, there were fears that there could be mixing, thereby defeating the very objective of the scheme to help the growers in the country, it was argued then. Also, the intrinsic quality of Indian pepper gave it a premium.

According to figures submitted, Cochin Spices exported 510 tonnes of pepper last year of which 215 tonne was sourced from outside, while AVT McCormick exported 915 tonnes of which 590 tonne was imported material.

The Spices Board which is learnt to have taken a sympathetic stand when the matter was raised during initial discussions refused to comment on the issue.