The Hindu Business Line : EOUs seek subsidy for pepper export

THE 100 per cent export-oriented units (EOUs) and units in the special economic zones, which had been kept out of the purview of export subsidy for pepper, have approached the Spices Board demanding that they should also be included in the scheme announced by the Union Government recently.

They claimed that they were also buying Indian pepper from the domestic market for processing and export; and hence they were also entitled to the subsidy, which is given to cover the transportation cost.

To support their claim, they said, the units could provide all the required documents to state that the pepper was bought from local farmers.

The Spices Board sources said a decision on this issue had to be taken by a Special Committee constituted for the purpose by the Ministry and hence, it would be sending their representation to the Union Commerce Ministry.

Meanwhile, Mr Thomas Philip, Managing Director of a major spices processing unit in the Cochin Special Economic Zone and President of the All-India Spices Exporters Forum told Business Line, "Since the subsidy is for transportation, it should be available to all. The decision to keep 100 per cent EOUs and units in the SEZs out is discriminatory".

He said about 65 per cent of the pepper exports were from these units. They buy up to 50 per cent of the pepper from the domestic market.

"If these units were also included we would buy more. Now we cannot buy from Kerala State Cooperative Marketing Federation (Marketfed), which is holding a stock of 4,800 tonnes it had procured last season," he said.

According to him, the subsidy is "too little and came too late" and therefore, neither the exporter nor the farmer is going to be benefited, he claimed. He said the claims that 20,000 tonnes of pepper would move out before March 31 might not take place and instead hardly 4,000 tonnes could be shipped out.

Effective from November 2, the Union Commerce Ministry has announced a WTO compatible subsidy for pepper at the rate of Rs 5 a kg, or actual cost incurred whichever is less, for international freight and Rs 2 per kg, or actual internal cost incurred whichever is less, for internal transport.

The subsidy is available for export of pepper in all forms, including value added pepper products for export of a maximum of 20,000 tonnes till March 31, 2006.

As per the notification, this benefit is "not available to 100 per cent Export Oriented Units (EOUs); units situated in the Special Economic Zones (SEZs); for re-export of imported pepper; export of pepper products processed from imported pepper irrespective of the percentage of imported pepper contained therein; and for export of pepper and pepper products to SAARC countries (countries with which India has FTA/PTA agreements and from where duty free imports into India are permitted)".

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