The Hindu Business Line : UPASI to revive plea for curbs on duty-free pepper import

THE United Planters' Association of Southern India (UPASI) will urge the Union Commerce Ministry to remove the anomalies in the existing Exim Policy, which allows duty-free import of pepper from Sri Lanka and also imports from other origins for re-export.

Mr A.S. Muthanna, Chairman, UPASI Spices Committee, told Business Line that it would be submitting a memorandum to the new Union Commerce Minister, Mr Kamal Nath, soon in this connection.

He said Sri Lanka produced around 7,000-8,000 tonnes of pepper of which 5,000-6,000 tonnes were exported to India. Pepper of other origins was also entering the market via Sri Lanka because of the duty exemption facility available to the importers.

Besides, he alleged, imported pepper was re-exported as MG 1 and this kind of practice would tarnish the credibility of the Indian produce and thus "Indian pepper will loose its name." Therefore, submission of certificate of origin should be made mandatory for all consignments, he said.

He said at present, imported pepper was just cleaned and shipped. Instead, there should be minimum 25 per cent value addition before export. The UPASI Spices Committee would study the time required for 25 per value addition and accordingly, suggest the total time required for re-export after the pepper landed in the country.

According to trading sources, imports of pepper through Kochi port during January to December 2003 stood at 11,900 tonnes while an estimated 7,000 tonnes of pepper are believed to have entered the country through Mumbai and Chennai ports, which included consignments shipped to inland destinations. This puts the total imports at 18,900 tonnes and of which imports by the oleoresin industry is estimated at 5,000 tonnes, leaving a balance of 13,500 tonnes for value addition and re-export. Exports during the period were at 14,100 tonnes as against 21,200 in 2002 and 22,600 tonnes in 2001.

The imported GL 500 pepper contains 13 to 15 per cent of light pepper, albeit bold, and that is sieved out and sold in the domestic market at the local prices, while the discrepancy is filled with MG 1 and then re-exported, they said.

"Light pepper is not used for grinding and for re-export," says Mr Kishor Shamji, President, India Pepper and Spice Trade Association.

According to him, bold berries, especially the "Wayanadan and Nadan" of Kerala, fetched a higher price of Rs 5 to Rs 6 per kg while the imported pepper was cheaper as it was bought at low prices and brought in without paying any import duty.

As per the present Exim Policy, he said, duty-free import of raw materials for export production is allowed under the Advance Licence Scheme on condition that there has to be a positive value addition. However, there is no prescribed minimum percentage of value addition required in re-export. As considerable cost is to be incurred in cleaning, grading, loading and unloading, processing, packing, transportation, port charges, interest on investment, bank charges, etc., prior to re-export of imported raw materials, prescription of mere positive value addition as criteria for duty-free imports was not appropriate particularly for agricultural products grown in abundance in this country and traditionally exported, he said.

In fact, some of the processor exporters were banned from exporting pepper after they were found to be shipping out Indian pepper as imported pepper by giving false declaration.

The Spices Board having realised the negative impact such trade was making on the pepper market had taken up the issue with the Union Commerce Ministry last year and Government seems to have ignored it, he added.

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