The Hindu Business Line : Pepper exporters want 3% DEPB rate restored

Kochi, Oct. 19 The Indian Pepper Exporters Association has urged the Director General of Foreign Trade (DGFT) to restore the DEPB rate, which it has reduced to 1.5 per cent recently, to 3 per cent.

In a letter to the DGFT, they said that Indian black pepper had been affected badly due to the abrupt reduction of DEPB rate since the commitments were made in advance, calculating the existing benefits available to the trade to compete in the world market.

In fact, the Indian black pepper exports could perform well in the recent past because of the transport subsidy and the revised DEPB rates. This has allowed pepper exporters to compete and increase the quantum of exports and, thus, enabled the country to earn more foreign exchange, it said.

“We have concluded contracts for October, November and even for January–March taking into account the benefits of DEPB rate of 3 per cent, and, therefore, the recent decision to reduce it to 1.5 per cent would hit the Indian pepper exporters badly landing us in uncalculated losses,” they said.

Besides, they argued, the pepper exports are being concluded in advance for shipments three to six months ahead.

Wrong time?

The reduction in DEPB rate has come at a time when the new crop season is ahead and the harvest of it is likely to commence by January 2008. It is a normal phenomenon of the trade that both buyers and sellers enter into commitments for three to six months in advance and cater to the needs of the export community.

The Union Government has provided a hedge mechanism to have price risk management as well as a price discovery mechanism through the regulated futures trading in the national level commodity exchanges which enable exporters to enter into futures contract with overseas buyers. However, this “abrupt changes in the policy of the existing DEPB rate puts all calculations out of focus and the trade ends up into unexpected losses for no fault of theirs,” they said.

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