Lanka not to cap pepper export to India

Giving a serious blow to India's efforts to put a cap on imports of black pepper from Lanka, Sri Lankan Export Development Board (EDB) has clarified that the quota put forth by India would not be implemented.

In a letter to Lankan spices exporters, Dammika Gamarachchi, acting chairman, EDB, clarified that as representatives of the export industry were not favouring the quota system, the Lankan government would not agree to the introduction of quantitative restrictions. But he added that the discussions with Indian officials would continue.

To tide over the plummeting pepper prices, the domestic players want to impose quantitative restrictions on the increasing imports from Lanka. Since past two years, imports from the neighbouring country are denting their profit.

On an average, Lanka is exporting 7,000 tonne pepper, including exports to oleoresin manufacturers, annually to India. The Union government had proposed to restrict the import to 2,500 tonne and had initiated talks with the Lankan authorities in this regard.

As India has a free-trade agreement with Lanka, duty-free import of pepper is on the increase. On an average, the Lankan price tag is lower by $50-100 per tonne. North Indian buyers prefer imports as they can fetch the product by remitting a 4 per cent countervailing duty.

Recently, India had proposed to remove limits on import of vanaspati and bakery shortenings against imposing a cap on pepper import. But as India is the major destination of Lankan pepper, traders in that country are not in a favour of accepting the proposal by India.

Meanwhile, a section of domestic exporters said there was no logic behind the quota system as domestic prices had doubled during the past six months despite huge imports from Lanka. India is importing around 3,000 tonne heavy berry of which 1,000 tonne is used for value-added products.

Around 4,000 tonne light berry is imported by oleoresin manufacturers which does not affect the domestic market. A domestic exporter said the current worries are unfounded as a major chunk of the import is used for re-export purposes.

As the harvesting season in on the anvil in India, the demand for imposing quantitative restrictions will be stronger in the coming days.