Export cess removal to give fresh impetus to spice industry

The local spice industry has received a fresh impetus with the removal of export cess on spices, a decision that has come following heavy stakeholder lobbying. The decision to do away with cess was gazetted recently, though effective from November 2015. The government in its November 2015 budget proposed to remove of export cess on pepper, nutmeg and cloves, but later announced that the tax would be re-imposed with the Export Development Board (EDB) and the Ministry of International Trade discouraging its removal.

They justified the cess, saying that the funds collected would be ploughed back into the industry. However, the Spices and Allied Products Producers’ and Traders’ Association (SAPPTA), the apex industry body for spices in the country, called for the decision to be revoked as the said move would negatively impact the industry. They pointed out that the levying or a cess had done nothing for the industry and funds collected over the years have been transferred into the Treasury. “So, this action (removal of cess) taken by the government is a step in the right direction. However, the need of the hour is to increase production which would lead to larger exports,” said SAPPTA Founder Chairman Gulam Chatoor to Mirror Business

He added that the removal would not only benefit producers, as any levy on export is borne by them, but would also create a positive psychological impact, which ultimately lead to increased exports. To capitalize on the positive development, the Association said industry players must increase their focus on pepper with it being recognized to have the potential to increase export numbers, both in terms of earnings and quantities, and capture a greater market share. It has been pointed out that the government releasing vast areas of uncultivated land to growers of spices is key to increase spice production and exports.

Apart from additional land, fertilizers at subsidized prices and planting materials may also help the industry to operate at an optimum level, generating more foreign exchange for the country. Sri Lanka currently accounts for approximately 10 percent of the world’s spice production.