Value-added spice exporters have been facing a crisis and are likely to shift to other countries with the Union government fixing a minimum import price (MIP) for pepper from December, 2017, the All India Spices Exporters Forum (AISEF) said here on Wednesday.
Value-added spice exporters have been facing a crisis and are likely to shift to other countries with the Union government fixing a minimum import price (MIP) for pepper from December, 2017, the All India Spices Exporters Forum (AISEF) said here on Wednesday. Members of AISEF said that exporters have lost nearly Rs 50-75 crore in the past three months due to the new development, and this would eventually lead to exporters, engaged in shipping value-added spice products, relocating their base. Pepper exports from India is also likely to decline by 50 % in the current fiscal as India has been largely re-exporting pepper after value addition . The Union government approved the proposal of the state-run Spices Board to impose a minimum import price of Rs 500 per kg ( CIF value) on the basis of reports that cheaper imports of pepper were seen putting pressure on the domestic market.
India is the largest consumer of pepper in the world and the second largest producer after Vietnam. Indian pepper prices are mostly seen at a premium over the global prices. “MIP imposed in the name of protecting local farmer interests has practically resulted in a ban on the entry of pepper in all forms. This has been done with no discussion with the export industry, that are the major importers of pepper for 100% exports with value addition. In order to compete with global prices, the government has provided the exporters various options of operating through SEZ, EOU and advance licence agreement (ALA) . The EOU and SEZ work under customs bond with complete supervision of customs or central excise,” Prakash Namboodiri, chairman of AISEF, told FE.
The notification neither classifies the different types of pepper nor does it confine the restriction on imports meant for domestic consumption or for trading in the local market. “India is no longer an exporter of raw pepper and exports value added pepper while Vietnam remains a commodity exporter. Being the global processing hub, competing origins depend on India for selling their raw material that adds to our advantage,” he added. “Our industry has become incompetitive in the international markets. It goes without saying that if we import pepper at a high price of Rs 500/kg, our export obligation would neither be achievable, nor will the global customers buy from India at over 40% the international market prices.
Pepper is always exported in combination with other processed spices out of India and rarely in isolation. Customers will prefer to buy the entire basket of spices from a single source. Already we have seen pepper exporters in Vietnam trying to source chilies from China to create a basket,” Namboodiri said. Regarding claims that imported pepper is sold in the domestic market, Namboodiri said that the processed products out of the imported pepper are fully exported as a value-added item which earns valuable foreign exchange.
“Imports of pepper are done with the condition that it has to be re-exported in 120 days. This is tightly controlled and monitored by customs. Ideally, they should have simply curbed the 2,500 tonne imported through the FTA and restricted any import of pepper by unregistered traders ,” he suggested. AISEF members also added that the MIP has not resulted in the strengthening of the domestic pepper prices but has led to a decline of nearly Rs 40 per kg with more pepper being smuggled by unregistered traders.