Import of arecanut, pepper and other commodities under false declaration of origin into India has of late become rampant, according to trade sources and farmers.

Pepper from Vietnam and arecanuts from Indonesia are landing at different ports in India as Sri Lankan produce, claiming import duty concessions extended to the neighbours and depriving India of its huge revenue.

Recently, 220 tonnes of black pepper and betel nuts worth ₹12 crore were reportedly seized by the Directorate of Revenue Intelligence at Nhava Sheva Port, Mundra Port and godowns in Mumbai and Ahmedabad.

These commodities were sent to India as Sri Lankan produce even though they were of Vietnamese and Indonesian origin.

Arecanuts do not attract any import duty if arriving from Sri Lanka, while black pepper attracts only 8 per cent duty. Indonesian betelnuts attract 100 per cent import duty, while 54 per cent duty is levied on pepper from Vietnam.

Even when Vietnam pepper is imported via Sri Lanka at a value of $6,000 per tonne for the purpose of levying 8 per cent duty, the Indian government is losing around $2,700 a tonne, the trade alleged.

The trade community here told BusinessLine, citing DRI sources, that consignments of betelnuts and black pepper were first imported to Sri Lanka from Indonesia and Vietnam, respectively, and then re-exported to India by declaring them as being of Sri Lankan origin.

For issuance of a certificate of origin, the Sri Lankan agencies charge $1,000 per tonne on Vietnam pepper, they said, adding, dummy importer-exporter codes in different names were also used.

High prices

Increasing demand in India without corresponding growth in production has kept pepper prices at high levels. As against the demand of an estimated 60,000 tonnes, India’s output hovers at around 50,000 tonnes.

The short supply coupled with higher prices have lured Indian importers to follow illegal routes to bring the commodity into the country to reap windfall profits. Vietnam, which had not exported much pepper in 2016 is reported to have shipped out a substantial volume this year and that, according to the Indian trade, has been channelled to Indian markets.

Sri Lanka imported 3,200 tonnes of pepper from Vietnam in January-August 2017 as against 440 tonnes in 2016. Similarly, Nepal, which had imported only 30 tonnes in 2016, reported inflows of 550 tonnes till August this year. As against 114 tonnes in 2016, Myammar has imported 1,300 tonnes.

Thus, the domestic market is flooded with imported pepper depriving farmers of remunerative prices, Kishor Shamji, an exporter, told BusinessLine .

Traders and growers, he said, have urged the Union government to fix $8,000/tonne as import duty on pepper arriving via Sri Lanka.

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