The Centre has suspended the Cashew Export Promotion Council of India (CEPCI)’s powers to issue or renew RCMCs (registration-cum-membership certificates) for exports.
In a notice issued late on Monday, the Directorate General of Foreign Trade designated the Agricultural and Processed Food Products Export Development Authority (APEDA) as the agency authorised to issue RCMCs for cashew kernel, cashew shell liquid and kardanol exports with immediate effect.
However, the DGFT notification clarified that the RCMCs already issued by CEPCI would be valid for the rest of the validity period. RCMCs are membership certificates issued for five years by the Export Promotion Councils or Commodity Boards of India. This certificate is issued as proof that a particular exporter is registered with that council.
The Kollam-based CEPCI has around 300 members, including associate members, and its main revenue is from membership fee and trade contribution from exporters. The decline in exports and migration of many exporters to neighbouring States due to the closing down of factories in Kerala, has hit its revenue. Besides, there are allegations of irregularities against the Council, particularly that funds received from the Commerce Ministry have been misappropriated.
CEPCI normally receives funds from the Commerce Ministry for modernisation of cashew factories as grant-in-aid, incentives for exports, quality improvement programmes, export incentives subject to conditions.
Welcoming the DGFT decision, K Rajesh, Founder, Cashew Industry Protection Council, told BusinessLine that the Ministry has finally acted on the representations against CEPCI on mis-utilisation of funds running into crores of rupees that it received for trade promotion activities. He alleged that the CEPCI was run bya handful of exporters, who focussed on their own business interests without rendering any support or assistance to small time exporters.
Even the incentives granted by the government have not been shared with those hard-pressed exporters who are in need of financial assistance for revival of their business, he said.
With the new DGFT order, Rajesh said individual cashew exporters can now approach APEDA for export licenses to meet their overseas business commitments.
A senior source in the cashew sector, speaking on condition of anonymity, said the Ministry has stopped the grant-in aid for modernisation programmes in the last two years following complaints of mismanagement.
Dip in export turnover
Competition in the export market and subdued domestic demand have impacted the revenue of the council and subsequently, export promotion activities. Cashew as a commodity has now become insignificant with the export turnover declining. Hence, the authorities thought it would not be viable to maintain a single organisation for one particular commodity, prompting them to suspend the powers of CEPC, the source added.
However, the source went on to add that the government decision would not have any adverse effect on exports, but exporters may face delays in receiving funds for modernisation and trade promotion from an umbrella organisation such as the APEDA, which has more applicants than a small entity like CEPCI.
Biju Karunakaran, Joint Director, CEPCI said: “We have not received any official communication in this regard and we are trying to get the details”.