Export Levy Remains A Drag On Spices Sector

Despite the changing global scenario on the spices front and the heavy reduction in import duties on many commodities announced in the recent budget to prop exports, the spices industry continues to face impediments in the form of export cess.

An industry source said almost 98 per cent of all other commodities being exported from the country do not fall under the purview of export cess. In the 1997-98 budget, a number of customs and excise duty on several commodities have been reduced to enable rise in production and exports in particular.

But the spices industry continues to reel under direct export tax in the form of a cess despite the government having realised the need to remove impediments for exports.

 

In keeping with this the Union budget of 1997-98 presented by P Chidambaram has also done away with the provisions of the minimum alternate tax (MAT) with regards to export profits.

Traders question the two per cent direct tax in the form of a cess on spice exports when the other commodity boards are exempt from it.

Kiranjit Singh Bajaj, honorary secretary of Spice & Foodstuff Exporters Association (SFEA) said with the recent notifications granting an exemption of cess to spices like black pepper, cardamoms, saffron, spice oils and oleoresins, approximately a third of the total exports (value-wise) has already been removed from the purview of cess. He demanded that this exemption be extended to the other spices so that they too can be benefited and exports can be further boosted.

Bajaj said India no longer has a monopoly in spices. Various other countries are now competing with India.

So all spices should be exempted from the purview of export cess and all spices should be treated on par with other the commodities.

He said that the Import-Export Policy 1992-1997, prescribes that the import of cloves, cinnamon and cassia are restricted items and will only be allowed against a licence based on past import performance and subject to the fulfilment of an export obligation of 200 per cent of spices items as enumerated in Appendix VIII of the Handbook of Procedures 1992-97.

In the past on a number of occasions import was permitted under the open general list (OGL), before being transferred to the restricted list.

Dry fruits including almonds and dates, considered as consumer goods, too suffered the same fate.

Today, these items are not considered as consumer goods and so can be freely imported. The moot question is why cloves, cinnamon and cassia have been differentiated, whose import is enjoyed only by a handful of