Govt may levy 8-10% import duty on Lankan black pepper

The government may impose 8-10 per cent duty for black pepper imported from Sri Lanka after domestic prices crashed owing to heavy imports.

According to sources at the ministry of commerce, the government will officially announce the black pepper import duty levy after the meeting with various trade associations and higher officials of the Kerala government scheduled on September 22.

This report has slowed down Sri Lankan imports. It has also led to increased pressure too for immediate delivery within the existing contracts.

Pepper import between India and Sri Lanka had increased by leaps and bounds owing to trade agreement between the two nations. Sri Lankan traders are also willing to supply at Mumbai, Kolkata and Kochi ports. The increased import from Sri Lanka over the last three years has been seen as a threat to the domestic market which consumes 50,000-55,000 tonne annually.

The Kerala government and other political parties are very keen on imposing restrictions on imports either in the form of quantity restriction or through imposing duty. It is learnt that the government has agreed to the second option and the announcement would be made very soon.

Although the total production in Sri Lanka is 20,000 tonne a year its major consumer is India.

During April-June, India imported more than 1,000 tonne from Sri Lanka. Through the Kochi port alone 651 tonne were imported. Pepper from Vietnam, the largest exporter of pepper to India, is widely used to produce value added items and hence for re-export business. But the major chunk of pepper imported from Sri Lanka is being sold in the domestic market, especially in north India which caused the fall in prices in India.

Of the total 5,172 tonne import in the first quarter of 2005-06, Vietnam's contribution was 4,235 tonne followed by Sri Lanka and Indonesia (225 tonne).

Meanwhile, reports on export subsidy had created some momentum in the domestic market and spot prices increased to Rs 6000-Rs 6400 a quintal. Vietnam, which had already exported 75,000 tonne, has increased its price tag marginally to $1,185 (500 gmiter), $1,250 (550 gmiter) and $1,350 for ASTA grade. Indonesia also offers ASTA at $1,350.

Traders here said that there might be a steady market currently and the government's announcement could create some momentum.

The momentum though may not be sustained in the long run as the global market is still not favourable.