Tariff barrier for cardamom sought

Tariff barrier for cardamom sought

Kochi: Encouraged and prompted by the recent decision of the finance ministry to fix a tariff for import of poppy seeds, the government trade promotion body, Spices Board, wants the administration to impose a similar tariff barrier for cardamom.

In the first week of December, the Union government fixed the value of one tonne of poppy seeds at $5,398 (Rs2.13 lakh) after traders started importing poppy seeds at $1,500 a tonne from Turkey.

The board says the material imported is being under-invoiced when the price even in Turkey, a major producer of poppy seeds, is around $5,000 a tonne. To attract a lower amount of duty, the price of the imported material was shown much below the value in the import documents. It was in this backdrop that the government fixed the base price of the commodity at $5.39 per kg.

Nearly 400 tonnes of cardamom has already been imported from Guatemala for around $2.50 (Rs100) a kg. With domestic cardamom prices rising to around Rs550 a kg, traders are nervous that even after paying 70% import duty, Guatemalan cardamom will be cheaper and would affect the prospects of the local producers who grow the spice.

S. Kannan, director of Spices Board, says the agency recently has written to the government to set a tariff, based on the average price of around Rs325 a kg—the ruling price during the last cardamom season between August 2006 and July.

Cheap Guatemalan cardamom is coming to India through Nepal where it is being sold duty free under the free trade agreement between India and Nepal. While the government initiated steps to check smuggling across the border, it has not yet responded to the pleas for a fixed tariff because it was being argued that this could go against the spirit of agreements under the World Trade Organization. However, since the government has taken a stand in the case of poppy seeds, it could be implemented for other commodities, traders argue.

The finance ministry took the decision to fix the value of poppy at $5,398 for a tonne, after $1,500 a tonne of the seeds landed from Turkey at different ports in India over the last few months.

India produces on an average around 11,500 tonnes of cardamom and the domestic consumption of the spice is around 80% of the output.

Guatemala is a major cardamom producing country with an average production of about 30,000 tonnes, a bulk of which is exported.

Honduras, Tanzania and Sri Lanka are the other producers whose output is very marginal and accounts for around 1,000 tonnes.

Trade sources admit that the quality of Guatemalan cardamom is inferior to Indian cardamom and there may not be a case of under-invoicing because the commodity is available in the Latin American country for $2.50 a kg.