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Tuesday, Aug 08, 2006

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Centre likely to restrict Lanka pepper imports

G.K. Nair

India wants it capped at 2,000 tonnes; Lanka wants to ship more

The scenario
Pepper imports from Lanka last year were around 7,000 tonnes.
This includes about 3,000 tonnes of light berries imported by the oleoresin industry.
When the Indo-Sri Lanka pact was signed, Lanka's production was at 8,000 tonnes.

Kochi , Aug. 7

The Union Government, in order to restrict duty-free import of large quantity of black pepper from Sri Lanka into the country under the existing free trade agreement, is understood to have suggested to its Colombo to limit its export to 2,000 tonnes a year.

However, the Sri Lankan authorities, according to reliable sources, have not agreed to the cap by the Centre. They have insisted on a cap of 3,000 tonnes and negotiations were on, official sources told Business Line.

Advance licence status

Meanwhile, imports by the oleoresin industry under advance licence would continue, they said.

Pepper imports from Sri Lanka last year stood at around 7,000 tonnes including the light berries imported by the oleoresin industry, estimated at around 3,000 tonnes.

When the Indo-Sri Lanka pact was signed, Colombo pepper production was at 8,000 tonnes. Its domestic consumption is 4,000 tonnes leaving an exportable surplus of 4,000 tonnes.

Out of this, about 2,500-3,000 tonnes were imported by the Indian extraction units under advance licence and later under 90 per cent duty concession as per the Indo-Sri Lankan pact, they said.

Later, when the Government widened the scope of trade with neighbouring countries and under the SAARC agreement, the imports were made totally duty-free. After signing the FTA, production of pepper in Sri Lanka increased significantly to 18,000 tonnes, they claimed. Besides, there were widespread allegations that pepper of other origins such as Vietnam is being channelled into India through Sri Lankan exporters by making trans-shipments of the containers at Colombo and obtaining the required certificate of origin.

India remains the largest importer from Sri Lanka with a share of 90.4 per cent of the total pepper exports in 2004 due to the 100 per cent tariff concession granted under the Indo-Sri Lanka Free Trade Agreement applied since March 2003. Absence of quantity restriction has led to the "dumping of Sri Lankan pepper in our domestic market," they pointed out.

As a result, even the Kerala Government's market intervention exercise last year by procuring 4,800 tonnes of black pepper failed to improve the market.

In order to protect the interests of the Indian pepper farmers, it has become essential that some restrictions be brought in to check Sri Lankan flow of this commodity into the country, they said.

According to the sources it is possible through the WTO agreement, which allows imposition of duty if imports are more than three per cent of the home consumption of a country.

"Since our home consumption is 60,000 tonnes per year, three per cent works out to 1,800 tonnes only and therefore the Government could easily impose some import duty on Sri Lankan pepper imports to protect the interest of the farmers".

On the other hand, exploiting the absence of checking facilities at some ports, even spices of inferior quality, are also imported into the country, they alleged. The situation, they said, demands that every import consignment be subjected to a quality check as per the Prevention of Food Adulteration (PFA) specification.

Therefore, to monitor the import of spices such as pepper, all imports of such sensitive spices must be permitted only through selected ports viz., Chennai, Tuticorin and Cochin, which have plant quarantine offices to check the quality as per PFA, a senior official said. The Spices Board is understood to have taken up these issues with the Commerce Ministry/Directorate-General of Foreign Trade.

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