Black pepper traders blame Lankan imports for price crash

Pepper imports from Sri Lanka attract just 8 per cent duty as against 70 per cent from other countries as India and Sri Lanka are signatories to the South Asian Free Trade Area (Safta) agreement. India also charges a lower duty of 54 per cent on pepper imports from Vietnam, the world’s largest grower, under the Asean agreement. Under the India-Sri Lanka Free Trade Agreement (Isfta), Sri Lanka is allowed to export 2,500 tonnes of pepper to India per annum at zero duty. “Around 4,000 tonnes of pepper exported by Vietnam to Sri Lanka has found its way to India with certificate of origin issued by the Sri Lankan authorities by paying no duty under ISFTA or 8 per cent concessional duty,” Kishor Shamji, coordinator of Indian pepper and spice traders, growers and planters consortium has said in a letter to commerce minister Suresh Prabhu .

The imports have hit pepper growers in Kerala, Karnataka and Tamil Nadu as prices have fallen in the local markets. “The cost of production in India is much higher compared with other countries and hence the adverse impact,” Shamji said.

He urged the government to advise Sri Lanka to temporarily suspend Safta and Isfta agreements for pepper imports while calling for a revision in line with the Asean agreement by charging 54 per cent duty on imports of pepper from and via Sri Lanka to protect the interests of Indian farmers and to avoid revenue loss to the government. Shamji said since pepper production in Sri Lanka has increased to 30,000 tonnes a year from around 12,000 tonnes a few years ago, there was no need to support that country’s pepper industry through Isfta.

Other than value-added exports under duty free imports, India has lost out on shipments of whole pepper. “Till now, Vietnam was selling lowest at $4,000 per tonne in the global market. Now, Brazil, with a bumper crop, is selling at around $3,450 per tonne. Indian pepper is priced the highest at $7,000 per tonne,” said Jojan Malayil, CEO of Bafna Enterprises.