The Hindu Business Line : Govt planning to curb import of Lankan pepper

THE Union Commerce Ministry is understood to be planning to put a cap on the quantity of pepper imported from Sri Lanka to check the flooding of the local market with imports, besides arresting fall in the prices of the indigenous produce.

Ministry sources told Business Line that to protect the interest of the country's pepper growers, the Centre was considering the proposal of the Spices Board to impose quantity restrictions on imports of pepper from the Island neighbour. Under the FTA with Sri Lanka, 50 per cent of its pepper production, which was 6,000 tonnes when the agreement was signed, was allowed to be imported duty-free. But, in subsequent years the imports from the island have increased significantly flooding the market here and depressing the domestic prices.

In recent years, Sri Lankan production has increased and it is estimated at 14,000 tonnes in 2005, while the projections for 2006 are at 14,800 tonnes, according to International Pepper Community (IPC). The exports from that country in 2005 are estimated at over 9,000 tonnes and most of it is to India.

On the other hand, exploiting the absence of checking facilities at some of the ports, even pepper of inferior quality, sometimes unfit for human consumption, are imported into the country, trading sources alleged. The situation, they said, demands that every import consignment must be subjected to a quality check as per PFA specification.

Therefore, to monitor the import of spices such as pepper, cardamom, cloves, all import of such sensitive spices must be permitted for import only through select ports viz., Chennai, Tuticorin and Kochi, which have plant quarantine offices to check the quality as per PFA, a senior official source said.

Given this scenario, the Union Government, to protect the interests of the pepper farmers, had imposed 70 per cent duty on pepper imports. But, while framing the bilateral trade agreement with the SAARC countries, which include Sri Lanka, pepper import from that country was neither deleted nor put under negative list. This has resulted in large quantities of black pepper are being "flushed into India through various ports as well as inland container depots". Surprisingly, these imports from Sri Lanka do not attract any State levies such as sales tax/VAT while indigenously produced pepper attracts such levies of each State of production (Kerala, Karnataka and Tamil Nadu).

As the Indian prices have moved up in recent weeks, Sri Lanka has also raised the price to Rs 72 a kg ($1,550 a tonne), market sources said. As the Indian prices have gone up, Sri Lankan exporters have started defaulting shipments. About 20 - 25 containers, which were to be shipped out have not left its shores, they alleged. This phenomenon coupled with the rumours that the Government would impose quantity restrictions on pepper imports from Sri Lanka had firmed up the market here. Indian parity has gone up to $1,700 c&f as against Brazils $1,500 c&f. As the prices started moving up the international players have become inactive, market sources said adding "we are becoming uncompetitive in the world market".

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page