The Hindu Business Line : Sale of imported pepper in domestic tariff area banned

THE Union Commerce Ministry while banning import of pepper under advance licences issued prior to the withdrawal of the facility early this year has also stopped sale of imported pepper and pepper products in domestic tariff area (DTA).

The DGFT under the Notification No. 2 (RE-2005)/(2004-2009) dated May 13 has included `pepper and pepper products' in the list of items which are not permitted to be sold in DTA at concessional duty.

According to the notification, "sales made to a unit in SEZ shall also be taken into account for the purpose of arriving at f.o.b. value of export by EOU provided payment for such sales are made from EEFC Account". EOU units now could sell finished products "except pepper and pepper products", which are freely importable under the policy in DTA under intimation to the Development Commissioner against payment of full duties provided they have achieved positive NFE".

Reacting to the Government's decision, industry sources here said that EOUs importing pepper for positive value addition and re-export were exporting the entire quantity after processing as required under the rules. Hence, it is not going to make any impact on the EOUs, they said.

However, the decision to stop imports of pepper under advance licences issued prior to the ban announced early this year would hit the oleoresin industry in the country as the units are mainly dependent on imported light pepper.

Light berries are not available indigenously and, hence, it is being imported from Sri Lanka and Vietnam. During January - December 2004, the extractors had imported 8,897.27 tonnes of pepper of this variety, while the re-exporters brought in 7,026.63 tonne of matured black pepper.

The total imports in the last fiscal stood at 17,725 tonne as against 14,334 tonne the previous year. Now the decision would compel the industry to source it exclusively from Sri Lanka, which in turn would result in increase in price there. On the other hand, it is not available in required quantity, they claimed.

Lot of pepper has come to India from Sri Lanka under the Free Trade Agreement without paying any duty and that has entered the domestic market. In fact, this phenomenon should be strictly monitored and its inflow into the domestic market stopped, Mr Thomas Philip, President, All India Spices Exporters Forum (AISEF), told Business Line. He said that Government instead of imposing a ban on imports of pepper by the industry should have caught hold of the culprits and punished them. The decision has upset the industry, he said. "It is not an economic decision but a political one," he alleged.

In the international market, pepper prices are ruling at Rs 58 - Rs 60 a kg now and the price is determined by the demand and supply position. In fact, "we are out of the market because of the high domestic price". Hence, banning imports by the industry would in no way going to help the farmers as the pepper imported are light berries, which cannot be sold on the domestic market.

Because of the high prices Indian pepper exports dropped to below 15,000 tonne in 2004-05, lowest ever in the last 45 years of the history of the country's spices exports.

Whereas exports from Vietnam, the world's largest producer of the commodity now had been on the increase. As against 74,635 tonne valued at $105.98 million in 2003, Vietnam exported 98,494 tonne worth $133.72 million in 2004.

The proposed export subsidy, however, could boost the exports as in that case the Indian pepper could be sold at the prevailing international prices in the world market, he said. But, the difference between the world market price and the purchased price here should have to be borne by the Government, he pointed out.

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