Financial Times - Desiccated coconut exports to India crisis

Desiccated Coconut (DC), manufacturers are unable to sell its annual total of 15,000 tonnes to India due to the latter stopping sellers from enjoying the 30 percent duty concessions they had since late 2003 through the Bangkok Agreement.

An industry analyst said the Indian government introduced a new policy in early 2005, changing the wording of the Bangkok Agreement involving several countries including India and Sri Lanka and thereby effectively altering the way the duty was calculated.

“Since they couldn’t revoke the agreement, they changed the way the calculations were made and now the duty levels are at 70 percent,” he said. He said that as per the Bangkok Agreement India could not revoke the duties. “Therefore they changed the wording and the new wording has reduced the duty concessions to only five percent,” he said. Murtaza Lukmanjee, Managing Director Adamjee Lukmanjee and Sons Ltd explaining the situation said DC was being traded in India under the Bangkok Agreement, because India rejected any concession for any type of coconut product under the free trade agreement (FTA) with Sri Lanka from the inception.

He said DC exporters have been exporting to India for one and half years through the Bangkok Agreement but none of them had fully aware of it before. “Nobody exploited the Bangkok Agreement till end 2003,” he said, adding that the companies were enjoying a concession of about 30 percent through this agreement. Industry analysts said the sad part was that the Department of Commerce has not done much about it, because their negotiating muscle is not effective. “They have tried, but not hard enough,” Manisha Samarajeewa, Executive Director, Adamjee Lukmanjee and Sons Limited told the Minister of Industries, Rohitha Bogollagama at a recent gathering of exporters to discuss the future plans for the exports sector recently. She told The Sunday Times FT that the matter is still in the discussion stage with the Ministry, the Department of Commerce and the Board of Investment.

Lukmanjee said that India has a potential of 40,000 metric tons a year and that Sri Lanka can easily capture about 15,000 tonnes. He said that out of the 50 to 60 desiccated coconut manufacturers in Sri Lanka only 20 to 30 export to India.