October 28: Smugglers have become active in black pepper business in the border areas. Black pepper, which is imported through legal  channels from third countries, is illegally exported to India. Due to this reason,  the spice is imported in heavy quantity which is much more than the country’s capacity to consume it.

Records maintained by the Department of Customs show that the country imported black peppers four times its consumption capacity in the first three months of the current fiscal year.

The department informed New Business Age that a total of 2400 metric tons of black pepper worth Rs 847.702 million has been imported to Nepal in the past three months.

There isn’t any statistics regarding the actual need of black pepper in the Nepali market but some estimates state that 500 metric tons of black pepper is more than  enough to meet the national demand. The price of black pepper is higher and thus is less consumed, claim traders.

The internal demand of black peppers is less within the country but is imported in high quantity to be exported to India illegally.

Police have seized 14 quintals of black pepper which were being smuggled to India via bicycles in Birgunj.

Similarly, police in Biratnagar too had seized black peppers in heavy quantity which were about to be taken to India illegally in motorbikes.

Why black pepper is illegally supplied to India?

As the production of black pepper has increased in the recent times, its price has been falling in the international market. Meanwhile, in India, the government has increased tariffs on the import of black pepper to protect the interest of the domestic farmers.

The price of black pepper last year stood at USD 7,000 per metric ton, which has fallen to USD 3,000 this year. India – the largest exporter of black pepper in the international market – has fixed 78.5 percent import duty on black pepper to protect the domestic farmers. Meanwhile in Nepal, the importers are charged 10 percent customs duty and 13 percent value added tax (VAT) while importing black pepper.

As there is massive difference of customs rates between Nepal and India, black pepper imported to Nepal is illegally supplied to the southern neighbor. Black pepper is imported to Nepal from countries like Vietnam, Indonesia, Brazil, China, Sri Lanka, among others.

It has been learnt that the traders are bagging a profit of almost Rs 400 per kg while illegally supplying black pepper to the Indian market. Black pepper is sold at Rs 1,000 per kg in the Indian market, which cost Rs 600 in the Nepali market. The traders in the border areas are supplying the product to India, as they have been making massive profit.

Vietnam, which is the largest producer of black pepper, is also the largest supplier of black pepper to Nepal. It produces one-third of the total black pepper production of the world.