The plantation industry is hopeful that the government will continue with incentives in the new year to help shore up sagging exports.
The merchandise export incentive scheme (MEIS), started by the Centre in 2015, was to end on Tuesday.
Commodity exporters are uncertain whether it will be continued or replaced with another scheme.
“The government may extend the scheme till March 31,” said RK Bhoodes, former chairman of Cashew Export Promotion Council of India.
Exporters reckon that as framing a new foreign policy will take time, the present scheme is likely to continue. Cashew export has been declining in the last few years with the rise of Vietnam as a major exporter of the commodity.
MEIS was disabled in August and restored in December after exporters complained that its withdrawal had dealt a heavy blow to their margins.
“It is difficult to stay in competition without incentives. The governments of our competing countries in Asia provide a multi-level help to the farmers including subsidies. As a result they are able to sell at a cheaper price in the global market,” said Rajiv Palicha, chairman of All India Spices Exporters Forum.
Marginal gains in the first half of FY20 appear to have been wiped out in the subsequent months for the spice industry in the absence of incentives. In 2020, the industry is expecting higher output of most of the major spices, such as chilli, cumin, turmeric and pepper. “Unlike India, many competing countries have little internal consumption and, hence, export bulk of the production. Only about 20% of our production goes for export,” he said.
The Centre is considering remission of duties on export product (RoDTEP) to replace MEIS. “But we have no idea what will be quantum of incentives and when it will be implemented,” said Ramesh Rajah, president of Coffee Exporters Association.
RoDTEP promises higher insurance cover and bank credit to exporters.
For the coffee industry, 2020 may be the third consecutive year of difficulty. Almost 70% of the coffee produced in the country is exported.
“Earlier, during bad times, when the crop was lower, prices would be higher. But now we are going through a phase when both the output and prices are lower,” Rajah said.