Economy

Planters too get the RCEP jitters

Vishwanath Kulkarni Coonoor | Updated on September 16, 2019 Published on September 16, 2019

Want govt to exclude plantation crops from proposed trade pact

The crisis ridden plantation sector that’s battling challenges such as weak prices, rising costs amidst oversupply and an erratic weather pattern, is seeing a new threat in the proposed Regional Comprehensive Economic Partnership (RCEP) agreement.

With China being a part of the proposed new trade agreement, the growers of plantation commodities are getting jittery.

“RCEP will be a new threat for the plantation industry that’s currently fighting many challenges. We urge the government to keep all the plantation crops under the exclusion list from the proposed RCEP agreement,” said ALRM Nagappan, President, UPASI.

An UPASI analysis reveals that India, during 2018-19, had an overall trade surplus of ₹4,368 crore with exports of plantation commodities such as tea, coffee and spices among others. However, with respect to the RCEP countries, India faces a trade deficit of ₹5,716 crore in plantation commodities.

“This indicates that plantation commodities will be losing significantly if the RCEP agreement materialises. We fear that further reduction in tariff proposed can only worsen the trade deficit in the plantation commodities once the market is opened up under RCEP as most of the ASEAN countries are producers of plantation crops itself. Such a development will make things worse for the sector, which is already facing challenging times on account of low prices vis-a-vis high cost of production,” Nagappan said.

India’s plantation sector is already facing the brunt of the international trade agreements that has resulted in cheaper imports. Commodities such as tea, coffee, natural rubber, cardamom and pepper have been exposed to international competition since April 2001, when the qualitative restrictions were lifted as per the commitments under WTO.

The signing of the ASEAN agreement in 2009 has further opened up the Indian market to countries such as Indonesia, Vietnam, Thailand and Malaysia that produce plantation commodities.

Under the ASEAN agreement, the import duties were gradually reduced since 2009 for tea, coffee and pepper, while natural rubber, cardamom and few tariff lines on coffee were kept under the exclusion list.

Currently, the tariff on imports of tea and coffee from ASEAN countries attracts a duty of 50 per cent, while for pepper it is 51 per cent. Also the import tariff for coffee and pepper under the WTO is 100 per cent and 70 per cent respectively.

India’s plantation exports stood at ₹12,361 crore in 2018-19, with coffee shipments accounting for ₹5,905 crore, followed by tea at ₹5,335 crore and pepper at ₹821 crore. Cardamom and rubber exports stood at ₹242 crore and ₹57 crore respectively.

Published on September 16, 2019
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