New Delhi: Projecting at least 30% dip in coffee exports this year, traders have opposed the new policy of capping the duty incentive on outbound shipment of the bean at 7% from 7.5% earlier.

Before the announcement of the Foreign Trade Policy for 2009-14 last week, coffee exporters were getting a 3.5% duty credit scrip under the Vishesh Krishi and Gram Udyog Yojna, apart from a 4% incentive under the Duty Entitlement Passbook Scheme.

However, with the new policy capping the overall duty incentive for coffee shipment at 7%, the cause of exporters has been dealt a blow, according to Coffee Exporters’ Association President Ramesh Rajah. India had exported 2.19 lakh tonnes of coffee in calender year 2008.

“We urge the Centre to provide us 7.5% duty, as was the case earlier. Exports may be down by 30% this year on a slow down in demand overseas. But if the 7.5% duty incentive is not granted, the export may slump further,” Rajah said.

India, the largest coffee exporter in Asia after Vietnam and Indonesia, had shipped abroad 1.33 lakh tonnes of coffee between January and August this year, compared with 1.64 lakh tonnes a year ealier, according to the data compiled by the state-owned Coffee Board.

Adding to the worry, prices of the Indian coffee have surged due to low output in the last season and even exceeded the global rates, making exports a less profitable option, Rajah said.

The country harvested 2.62 lakh tonnes of coffee last year, 5% less than what the Board had estimated. Moreover, importing nations are also looking at alternate avenues like Vietnam and Indonesia for purchase, as prices of Indian coffee are higher, he added.

The Indian coffee is quoting higher in the range of 10-30% across varieties than that of some other exporting nations, according to Rajah. The country exports about 80% of its total coffee output.

India exports coffee to Italy, Russia, Germany, Belgium and the Arab countries.