The Hindu Business Line : Spices exporters want advance licence for pepper imports restored

THE All India Spices Exporters Forum (AISEF) has appealed to the Union Commerce Ministry to restore advance licence scheme (ALS) for import of black pepper light berries (used as a raw material by oleoresin industry) and failing which, it warned, the industry would be compelled to shift its base out of India.

It was the support of ALS that had led to significant expansion of the industry in India, Mr Ramkumar Menon and Mr Sanjay Mariwala, Chairman and Vice-Chairman, AISEF, respectively told Business Line.

They said the oleoresin industry imported black pepper to the tune of 5,000-6,000 tonne per annum as against world production of 3 lakh tonnes of black pepper.India's production is just about 75,000-85,000 tonne. All the pepper bought on ALS comes with an obligation to re-export. These imports given at 6,000 tonne a year are just around eight per cent of India's production and two per cent of the world production of black pepper and such a minute quantity cannot adversely influence the price of pepper prevailing in India, they pointed out.

Moreover, they said, the oleoresin industry imports pepper berries of weight less than 450 g/litre, which is a special grade of pepper. This kind of immature light pepper is specially plucked in Sri Lanka, Vietnam, Indonesia, and Malaysia.

Besides the 6000-tonne, imports by the ground spices industry are about 3,000-4,000 tonne. Both the industry put together import 300-400 tonne of white pepper. Thus, the total imports under ALS do not exceed 12,000 tonne, they claimed.

" Currently, there is a perception among certain constituents that Indian prices are very low and this is caused by such imports," they alleged.

They said the current low prices around the world were due to significant over supply caused by huge production of pepper in Vietnam. The growth in Vietnam has occurred over the last five years during which time India has witnessed very high price of black pepper and it is because of the artificial price that Vietnam has been encouraged to cultivate more black pepper and flood the market today.

Added to this, artificially high tariffs on imports into India have created a wrong expectation of demanding higher prices for commodities when around the world the price, in fact, have fallen. Even at today's level the price of Indian pepper remains higher than the other origins, which is why there was no demand for Indian pepper, they argued.

Therefore, they said, cancelling the ALS was not the solution and it would not bring in any improvement in pepper prices.

Pepper prices have fallen further since there is more Vietnam pepper available and Vietnam would find ways to sell cheaper pepper internationally. On the other hand, due to duty-free imports of black pepper from Sri Lanka under the Indo-Sri Lanka Free Trade Agreement, the Sri Lankan pepper market has witnessed a steep increase of 20 per cent in price as a consequence of this development in India.

Thus, they said, "by this shift in policy, the benefit has occurred only to Sri Lanka."

In India, an artificial price situation is being created by the announcement of price by the Kerala Government at Rs 75 a kg. "The Indian industry cannot buy Indian pepper at Rs 75 a kg and use their capacity effectively to sell internationally against competitors who have access to Vietnam pepper at much lesser price," they pointed out.

This policy shift, therefore, had compelled the AISEF to send out "strong signal to the industry to shift its base out of India and establish manufacturing units at cheaper origins such as Vietnam," they said.

They said AISEF had already presented these facts before the Union Commerce Minister and the Chairman, Parliamentary Standing Committee on Commerce.

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