The Hindu Business Line : Lankan traders oppose cap on pepper imports by India

The Sri Lankan Spices and Allied Products Producers' and Traders' Association (SAPPTA) has said there is no necessity for India to place a cap on imports of pepper from the island nation.

"Any restriction would be against the spirit of the agreement entered into by the two countries," the association said.

The association officials who had attended a meeting organised by the Sri Lankan Commerce Department with the Indian official delegation in Colombo on January 28, told Business Line through a communication that "India intends imposing a cap on imports of pepper into India from Sri Lanka and a figure of 2,000 tonnes was indicated by them."

SAPPTA TEAM

The SAPPTA delegation was led by its Chairman, Mr S.A. Cader. He was accompanied by two past chairmen Mr Gulam Chatoor and Mr M.C.M. Zarook.

Mr Gulam Chatoor, who made the presentation at the meeting, said India had been " importing pepper since decades from Sri Lanka for their extraction industry for the manufacture of oleoresins."

Quoting 2003-04 and 2004-05 figures, they said in 2003-04 the quantity of pepper that had gone into the Indian domestic market was 2,579 tonnes, while that in the next year was 1,121 tonnes.

These quantities, given the estimated production of pepper in India at 70,000 tonnes, were only 3.7 per cent and 1.6 per cent of the total pepper output of India, they claimed.

Therefore, they said: "there was no necessity to place a cap on imports into India from Sri Lanka in view of the negligible quantities from Sri Lanka being absorbed by the Indian domestic market."

IPC report

However, quoting a latest report of the International Pepper Community (IPC), trade sources here said Sri Lanka had exported 6,853 tonnes of black pepper during January - September 2005, against 3,448 tonnes during the same period the previous year, recording a significant increase of 3,406 tonnes or 98.8 per cent.

The total volume of imports from Sri Lanka during 2005, they said, was around 7,500 tonnes.

Largest importer

India remained to be the largest importer of pepper from Sri Lanka with a share of 90.4 per cent of the total pepper exports in 2004 due to the 100 per cent tariff concession granted under the Indo-Sri Lanka Free Trade Agreement applied since March 2003.

When the agreement was signed, Lankan production was at around 8,000 tonnes and hence 50 per cent of the quantity available (light berries for the oleoresin industry) was allowed to be exported to India.

Besides, the trade feared that pepper of other origins could also enter India as the produce of Sri Lanka like cloves and arecanut from Indonesia were shipped out of that country giving false certificate of origin. The customs authorities in Colombo had recently unearthed such shipments violating the free trade agreement, they said.

Restriction needed

Given this situation, they said that to protect the interest of the pepper farmers "imports from Sri Lanka needs to be restricted by quantity to 3,000 tonnes for extraction units only or a duty may be imposed if quantitative restriction application is not possible under bilateral agreement.

Low productivity and high wage structure makes Indian farmers' cost of production high compared to other producing countries. "Therefore, pepper farmers' only hope of getting a better price realisation is the domestic market, which also is being deprived since few importers take care of cheap supplies to in the domestic market and depress the local pepper prices," they said.

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 imports from that country was neither deleted nor put under negative list. This has resulted in large quantities of black pepper being "flushed into India through various ports as well as internal container depots," trade sources allege.

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