KOCHI: India’s cocoa processing industry is upset over the withdrawal of import duty on powdered beans, which they claim has led to higher imports at a time when international prices are falling.
Though imports of the beans from countries like Indonesia was tax-free previously as well, cocoa powder and butter faced a duty.
“The duty on cocoa powder ranging 20-30% has been removed from January and the imports have increased since then. This has affected the local companies who buy cocoa from the local market for processing,” said M Suresh Bhandary, managing director of Campco Ltd.
The company buys around 3,000 tonnes of cocoa beans annually from the Indian market for processing.
Import of cocoa beans and products have been steadily moving up with the country increasing its processing capacity in recent years. Mounting demand led many companies to source beans cheaply without duty from Indonesia, instead of sourcing superior ones from West Africa which faced more than 30% tax.
Now, the withdrawal of duty on cocoa powder, which is widely used by the confectionary industry, has affected the processors as foreign players can source the superior beans from West Africa, process and ship to India where they don’t have to pay any tax.
“Southeast Asian countries like Malaysia and Singapore have built huge processing capacities and are importing beans from Africa and exporting finished products. The cocoa products from these countries coming to India without duty are 20% cheaper,” said Durga Prasad, managing partner of DP Cocoa Products, which processes around 9,000 tonnes of cocoa for chocolate maker Mondelez India.
Meanwhile, international cocoa prices crashed by 35% last year following a glut in Ivory Coast and Ghana, which account for more than 60% of the global supply, and the fall in British pound after Britain’s decision to exit the European Union. However, Indian prices did not fall to the extent of global price — local bean prices still range from Rs 160 to 170 per kg, compared with Rs 130 in the international market.
As per data provided by the Directorate of Cashewnut and Cocoa Development, total cocoa production in the country increased 10% from a year earlier to 18,920 tonnes in 2016-17. At the same time, imports of cocoa and cocoa products expanded 12% to 63,613 tonnes. The most significant rise has been in the import of cocoa beans, which rose more than 50% to 26,219 tonnes. Cocoa paste import increased 77% to 4,914 tonnes.
According to the industry, the plunge in global prices aided the imports. Also, higher import of cocoa powder has not been fully reflected in the data as it picked up only from January when the duty was scrapped, they said.
Source: economictimes.indiatimes.com