Govt withdraws benefits under Vishesh Krishi scheme to spice exporters

Govt withdraws benefits under Vishesh Krishi scheme to spice exporters

Kochi: Spice exporters are to face a Rs200 crore drop in value with the government suddenly withdrawing benefits under the Vishesh Krishi and Gram Udyog Yojana. Through the scheme, 5% of the value of the product exported is waived by way of duty credit while importing goods. This is transferable to those importing material goods.

“It has come as a bolt from the blue. We were never ever consulted in the matter. A government order received says that with effect from 23 August, exporters are not eligible to benefits of the scheme," says Phillip Kuruvilla, chairman of the All-India Spice Exporters Forum.

The industry had been demanding extension of the scheme for two major spics, pepper and chilli, when the director general of foreign trade announced the withdrawal of the benefit and no reason has been accorded.

Keeping chilli and pepper out which fetched Rs1,695.65 crore from the total spice export of Rs5,560.5 crore during the fiscal ended March 2010, the government should at least restore the benefit till the end of this fiscal, he said. Between April and July, India exported 1,93,875 tonnes valued Rs2,084.96 crore. Of this, 84,500 tonnes was chilli and pepper valued at Rs594.47 crore.

With the benefits accruing from the scheme, the industry worked on seasonalities of crops and contracts were signed much in advance. Most of the exporters entered into annual forward contracts for the year during the crop season.

In the wake of global competition, exporters had discounted the 5% available under the scheme. But the sudden withdrawal will not only mean losing the competitive edge and thereby the market but also incur direct losses, says Sushma Srikandath, chief operating officer of AVT McCormick Ingredeints P Ltd.

Bhaskar Shah, managing director of Mumbai-based exporting firm Jabs Intl Pvt Ltd, says that in spite of stiff competition from Syria and Turkey, India had succeeded in making it big into the European market for cumin seeds.

During the last fiscal, India succeeded in exporting 49,750 tonnes of cumin worth Rs548.24 crore. “We will not only lose the edge we had but also find it difficult to regain once the market is lost," he said. The forum is to meet the Union commerce ministry officials on Monday and request retention of the scheme at least till the end of this fiscal and also ensure that any future amendments should be made effective only on a prospective basis giving sufficient time to change the terms of business contracts.