Pepper minimum import price will lead to closure of export units

 


All India Spices Exporters Forum (AISEF) said that recent government notification to impose Rs 500 per kg minimum import price on black pepper will create negative perception for the Make in India initiative and is likely to impact all investments in set-up of import-re-export businesses in future, unless it is reversed.

Because of high pepper prices since 2006, it has prompted farmers all over the globe to increase the production. The Indian consumption of 60,000 tonnes per annum keeps Indian prices way far higher than other producing countries where the local consumption is only 5000-8000 tonnes annually.

Chairman of AISEF, Prakash Namboodiri said this notification practically bans the entry of pepper in all forms from outside and anyone who acquires pepper at global market price will face penalty at 70 per cent duty on differential price and surcharge. He described this move as a death blow to 100 per cent EOUs and SEZs. Some of the 100 per cent EOU and advance licence holders whose shipment has hit the Indian shores since last two weeks have been slapped with notices of Rs 2.5 to 2.7 lakh penalty for not providing Rs 500 as per the new notification

 

Manufacturing in India with the higher import rates fixed by the country would lead to the closure of export units. The export units have entered into various international supply contracts for private retail labels and bulk supply packs. The reputation of Indian importers and exporters is at stake as contracts cannot be revised and terms cannot be breached.  Also, most of the contracts are for mixed spices like pepper, chillies, ginger, turmeric, etc in assorted lots. Without pepper in the portfolio, the export of other items would also be severely hit. Oleoresin companies and other value added processors will not be competitive to sell their products in the international market, if they import pepper at such a high price and may incur additional loss by paying composition fee for export obligation value shortfall.
The government has fixed minimum import price of all forms of pepper at Rs 500 per kg or $7875 per tonne when today global market prices are trading at $3500-3600 per tonne. This means that the government expects all the export units to use Indian pepper at Rs. 500 per kg ($7875/tonne) which is about $4375 /tonne above the world parity levels, Namboodiri noted.

 

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