Lanka Business | 14 January 2008
Sri Lanka stops pepper exports to India under free trade deal
Jan 14, 2008 (LBO) - Sri Lanka has stopped exporting pepper under the Indo-Lanka Free Trade Agreement (FTA) because of restrictions imposed by India, a top exporter has said.
Gulam Chatoor, former chairman of the Spices and Allied Products Producers and Traders Association said India’s imposition of a cap of 2,500 tonnes a year on pepper exports went against the aim of free trade.
"No exports have been made during the current year under the FTA although fair quantities of pepper have been exported from Sri Lanka to India to the export oriented units and to the extraction industry,” Chatoor said.
He told LBO that the trade has asked India to allow pepper exports without restrictions or put it on the negative list.
Products on the negative list in the FTA do not get tariff concessions.
Sri Lanka’s Spices and Allied Products Producers and Traders Association has decided not to export any pepper to India under the FTA as it felt the restrictions imposed by India went against the "spirit" of the agreement, Chatoor said.
Chatoor said that other Sri Lankan spices enter India without import duty and this has boosted exports of spices to the sub-continent.
He explained that Sri Lankan pepper was still being exported duty free to India outside the FTA under special concessions given to Indian export oriented businesses for processing, value addition and re-export.
Chatoor said the trade understood that India’s imposed the quantity restrictions on Sri Lankan pepper under the FTA after protests by Indian producers of pepper.
Indian pepper is generally more expensive than Sri Lankan pepper.
The FTA has boosted trade between the two neighbours but has also been dogged by problems over some exports like pepper and vanaspathi vegetable oil owing to protests by Indian industry.
"Both governments have to be committed to free trade if they are embarking upon trade agreements," Chatoor said.