Spices re-export period may be extended

The Union government is likely to enhance the period of re-export of imported spices, after value addition, to 180 days. Sources said that an announcement in this regard is likely to be made in the next edition of the foreign trade policy to be announced soon.

Currently, the period for re-export is 120 days. Various spices exporter's organisations such as All India Spices Exporters Forum (AISEF) have made several representations to the Commerce ministry and the Spices Board, for increasing the period. The value-added exporters had strongly demanded extending the period to at least a crop season. But the board did not favour such a long waiting period for re-export, since that might lead to market manipulations. It is also learnt that it recommended raising the period by 60 days.

A number of spice based re-exporting companies, especially in oleoresin and oil manufacturing sector, are seriously planning to re-locate their production base to countries like Vietnam. Vietnam is apt for spices-based processing companies such as pepper, ginger, nutmeg and turmeric as these are readily available there at cheaper tags compared to India. This is due to the stringent 120 days norm for re-export set by the Director General of Foreign Trade [DGFT].

According to the norm, spices procured from other countries for value addition purposes should be re-exported within 120 days. Earlier, the time limit was two years. Around a year back, DGFT had slashed the limit to 90 days. The government then enhanced the term to 120 days since there was a serious set-back to the domestic spices processing industry as a result of the time period. As India is well acclaimed in US, Europe, Australia and Japan for quality spice-based products, the country has a definite advantage. Incidentally, India is controlling more than 90 per cent of the global market of spice based value added products like oleoresins, oils and powdered spices. Exporters opine that the government should enhance the time frame to at least a crop season [one year] so that the companies could reap the advantage of stocking the raw materials during the harvesting season.

Certain special varieties of spices such as light berries of pepper are available only during the season and companies have to stock them for the next one year. It is hard to re-export the products within 120 days as exports are possible only against overseas orders.70 per cent of black pepper,75 per cent of nutmeg, 40 per cent of turmeric and 60 per cent of ginger being used by the oleroesin manufacturers is imported. Between April and February, 2006 -07, India exported 5520 tonne of spice oils and oleoresins valued at Rs 441.85 crore which are lower by 2 per cent in quantity and 3 per cent in value compared with the corresponding period in the previous financial year. In 2005-06, the total oleoresin and spice oils exports were at 6225 tonne, valued at Rs 500 crore as per the estimates of Spice Board.