Cloves importers seek duty cut

Traders and importers dealing in cloves want the existing import duty of 70 per cent to be brought down by 55 per cent to bring it at par with other spices like black pepper and cardamom.

Domestic production of cloves is insignificant. The spice attracts zero duty if imported from Sri Lanka under the existing free trade agreement.

Internationally, cloves are being offered at $2800 per tonne excluding duty for the Madagascar variety.

Cloves from Sri Lanka are being sold at $4000 per tonne. Domestic prices are largely based on current import duties.

Black pepper and cardamom are grown in abundance by planters in southern India but domestic production of cloves is only 100-300 tonnes of cloves against annual demand of 12,000-18000 tonnes. It is used in food and for some medicines based on natural clove bud oil.

A local importer said the price of cloves often experienced wild fluctuations. When the prices are high, demand falls.

Prices in India shot up from Rs 150 per kg to Rs 250 when the import duty was raised from 35 per cent to 70 per cent.

Indonesia is the world's largest producer and consumer of cloves with a crop of 90,000 tonnes but it imports cloves as well.

The spice is used for flavouring cigarettes popularly called 'kratek'.

Other major cloves producers are Zanzibar with average crop of 8000 tonnes, Brazil with 2000 tonnes and Sri Lanka with 4000 tonnes.

Sri Lanka enjoys a vast captive market in India.

Thanks to the zero duty policy, Lankan exporters enjoy a substantial price advantage over cloves from other countries.