The Director General of Foreign Trade (DGFT) has initiated an investigation into cheap imports of pepper from Vietnam and Indonesia which are reportedly threatening the domestic trade. The regulator is probing the alleged misuse of free trade agreements (FTAs) with Sri Lanka and Nepal for duty-free import of pepper. The United Planters' Association of Southern India (Upasi) has alleged that clandestine imports of pepper through Nepal are affecting domestic trade. They are also importing for value addition and re-exports but instead of re-exporting it, they are selling in the domestic market.
Pepper is currently traded at Rs 735 per kg in the Indian market - an annual increase of 45.5%, while traders are getting it at Rs 620-630 per kg from Vietnam. In 2013-14, India imported 15,680 tonnes of pepper valued at Rs 616 crore. This year, exports are expected to increase 20-25%. The ministry of commerce, based on a complaint from Upasi, has asked the DGFT to probe how FTAs with the two neighbouring countries are being violated. They do not have any estimate on the clandestine imports but they understand from trade sources that people are misusing the FTA with Sri Lanka and Nepal.
The numbers of traders in Nepal are importing pepper through the Kolkata port. Instead of taking the consignment to Nepal via the road route, they are terminating the stocks in the Indian market, which is affecting domestic producers. Domestic production of pepper declined 18.2% to 45,000 tonnes in 2013-14 compared to 55,000 tonnes in the previous year. This year, however, the production is estimated to go up 33% to 60,000 tonnes due to bumper crop in Karnataka. The production in Kerala, the traditional leader in production, is likely to decline due to heavy monsoon rains damaging the crop earlier this year.