Mounting import of Vietnamese pepper via Sri Lanka worries India

(Kochi) ECONOMIC TIMES: Pepper exporters have expressed concern at the rising import of Vietnamese pepper routed through Sri Lanka into the country despite the imposition of minimum import price of Rs.500 per kg by India. 

The MIP was fixed last year to protect the interest of the local pepper growers after over 40 percent decline in prices though productions were normal. 

Pepper imports from Sri Lanka carries 8 percent duty under South Asian Free Trade Agreement (SAFTA) while there is no duty for a quantity of 2500 tonnes. A change in the policy has enabled pepper traders in Sri Lanka to re-export Vietnam pepper available at US$ 2500 to 2800 per tonne, which is about Rs. 200 per kg.  “Vietnam pepper entering Sri Lanka is re-routed to India without any value addition with Sri Lankan authorities issuing a certificate of origin, which they are not supposed to issue for pepper from any other country,’’ said Kishor Shamji, an exporter. 

The Sri Lankan exporter is invoicing the Vietnam pepper at US$ 7200 per tonne, which equals the Rs.500 per kg MIP, while shipping to India. “He has to pay just 8 percent duty, which is Rs.40 per kg plus other expenses coming to Rs.25 for sending to India,’’ he said. 

According to him, the 8 percent duty was fixed when the Sri Lankan production was hardly 10,000 tonnes. Now it has gone up to around 28,000 tonnes. 

“We should have a re-look at the duty and bring it on par to 52 percent applicable for other ASEAN countries,’’ he said.  The Indian pepper prices are hovering around Rs.360 per kg now and the Vietnam pepper is reaching India via Sri Lanka at a rate below Rs.300 per kg.