Pepper surges on limits over Lankan imports

Prices of black pepper have shot up by Rs 300 a quintal following the long-awaited quantitative restriction on the imports from Sri Lanka.

Although the market reaction was rather psychological, the spot prices of farm grade pepper surged to Rs 10,500 a quintal in the morning session on Wednesday.

The mood in the market was upbeat after the notification of the director general of foreign trade (DGFT) on Tuesday. The notification has restricted the total quantum of pepper imports under the Indo-Sri Lanka Free Trade Agreement to 2,500 tonne per annum.

The free imports of black pepper from Sri Lanka had led to the domestic prices dropping to the level of Rs 6,500 by May. The imported pepper had seriously hit local traders and farmers and there was a huge outcry to cap the imports from Sri Lanka.

Sri Lanka had been resisting New Delhi's move, with more than 50 per cent of the country's annual production exported to India.

Meanwhile, oleoresin manufacturers, 100 per cent export-oriented units (EOUs) and units in the special economic zones (SEZs) are unaffected with the notification, as it does not regulate their imports.

A major section of traders and exporters here said the market reaction would be a temporary one, as the cap on imports would not have a serious impact in the long run.

Sushama Sreekantath, chairperson, All India Spices Exporters' Forum, said the restriction would only be confined to imports by upcountry traders and would not have a serious impact on the market as a whole.

She said of the average annual imports of 7,000 tonne from Sri Lanka, about 3,000 tonne is imported by traders in north India. With the imports now restricted by 500 tonne, the impact would not be major, she added.

India imports light berries from Sri Lanka, as it is best suited for making oleoresin. The EOUs and the units in SEZs import pepper for re-exports.

Earlier, the government had imposed 4 per cent countervailing duty on Sri Lankan imports, slowing down the imports. There were complaints that Sri Lanka was exporting Vietnamese pepper as pepper of Sri Lankan origin.