Drop pepper from import list of free trade pacts: Growers, trade plead with Centre

The Indian Pepper and Spice Traders, Farmers, Producers and Planters Consortium (IPSTPC) has urged the Commerce Minister, Suresh Prabhu, to remove black pepper from SAFTA (South Asian Free Trade Area) and ISFTA (Indo-Sri Lanka Free Trade Agreement) import list in order to save domestic growers.

In a memorandum to the Minister on Saturday, Kishor Shamji Kuruwa, IPSTPC Cochin Chapter Head, claimed that Sri Lankan pepper had lost its eligibility for any concession from India ever since its production rose to over 28,000 tonnes, and with Sri Lankan authorities allegedly issuing, wrongly, Certificate of Origin to Vietnamese imported pepper into India via Sri Lanka.

He said the free trade in pepper was implemented in 2006 and 2003 when Sri Lankan production was around 8,000-10,000 tonnes.

“Such phenomenal increase in recent years in its output gradually has resulted in Sri Lankan exporters dumping their pepper in the Indian market under the shade of these two agreements in spite of the Indian government imposing an MIP,” he said.

It is surprising that still Sri Lankan pepper is being imported under SAFTA with 8 per cent import duty which works to ₹40/kg. Besides, they are still holding duty free import licence under ISFTA.

The minimum import price or MIP of ₹500 a kg on CIF value works out to nearly $7,850/tonne against the prevailing prices of $4,700-4,900 CIF Indian port. The landed cost comes to ₹350 a kg including an import duty of 8 per cent. The difference between the landed cost and the domestic price here is substantial, at₹55 to ₹95 a kg, he said. If this situation continues, it will be at the cost of India’s pepper farmers, who are trying to market their 2018 new crop, he said.

Meanwhile, some Karnataka importers are understood to have shipped in Vietnam pepper at the Bangalore ICD and paid 54 per cent duty but allegedly on heavily under-invoiced consignments. It is alleged that as against the original price of $4,550 a tonne, the invoice price was $3,550 depriving the country of duty of $540/tonne.

Slipping into the domestic markets part of the pepper imported for value-addition and re-export also adds to the pressure on domestic prices.

“The only solution to this is correct and thorough monitoring. This will ensure that the spent pepper, which remains after extraction, does not slip into the local market. This is where a policy change by the government is immediately needed,” Sunil Tamgale, Chairman, Scientific Agro Technologies (SAT), a division of International Agro-Consultancy, Bengaluru, told BusinessLine.

Already in 2017, pepper exported “from and via Sri Lanka” hit 3,000 tonnes, including not only their own produce but also Vietnam pepper, which was issued the Certificate of Origin, says the IPSTPC. Moreover, it is being widely alleged that Vietnam pepper — destined for Nepal, Myanmar and Bangladesh — is arriving into India through the borders.

The Centre had, in a bid to protect farmers, imposed 70 per cent import duty. For ASEAN countries (Vietnam) it was 54 per cent in 2017, but this year it is 52 per cent, according to the ASEAN agreement.