India's spice exports

SYLLABUS

GS 3 >> Indian Economy >> International trade

REFERENCE NEWS

The Economic think tank Global Trade Research Initiative (GTRI) report suggests that the current controversy involving MDH and Everest spice companies could endanger more than half of India’s spice exports. The report emphasizes the urgent need for India to address the quality concerns surrounding its spices to safeguard the reputation of its spice exports.

STATUS OF INDIA’S SPICE EXPORTS

Spices are dried parts of plants which include seeds, roots, bark, and fruits. These are valued for their flavours, aromas, preservative qualities and their ability to mask undesirable odours.

India is the world’s largest producer, consumer and exporter of spices. A total of 52 spices are under the purview of the Spices Board. Spices Board (Ministry of Commerce and Industry) is the flagship organization for the development and worldwide promotion of Indian spices. It was established by the Spices Board Act, 1986.

• The export of spices contributes 41% of the total export earnings from all horticulture crops in the country.It ranks fourth in terms of exports among agricultural commodities– behind only the marine products, non basmati rice and basmati rice.
• India’s Share in Global Spice Exports- 12% (Total Spice trade of the world- USD 35 billion. China is the top exporter, with exports of USD 8 billion in 2023).
• Major Spices exported from India: Chilli powder, Spice oils and oleoresins, Cumin, Turmeric, Cardamom
• Major Spices Imported by India: Spice oils and oleoresins, Cinnamon and cassia, Coriander and cumin Nutmeg, Asafoetida
• Markets of Indian Exports: China, US, Bangladesh, UAE, Thailand

SIGNIFICANCE OF SPICE EXPORTS FROM INDIA:

• Economic Impact: Spice exports significantly contribute to India’s foreign exchange earnings, improving the country’s balance of trade and strengthening its economy. For example, India earned 4.25 billion USD through spice exports.
• Employment Opportunities: The spice industry, being labor-intensive, generates employment in rural areas, contributing to poverty alleviation and rural development. For instance, in Kerala, it serves as a major source of employment.
• Agricultural Diversification: Spice cultivation provides farmers with an alternative source of income and helps diversify agricultural production. Spices contribute to 41% of India’s horticultural export earnings.
• Promotion of Cultural Heritage: Spices are deeply intertwined with India’s cultural heritage and culinary traditions. Their export promotes Indian culture globally and enhances the country’s soft power.

RECENT CHALLENGES IN INDIA'S SPICE EXPORTS:

• Carcinogenic Chemicals Detection: Popular spice brands like MDH and Everest faced bans in Hong Kong and Singapore due to the alleged detection of the carcinogenic chemical ethylene oxide in their products.
• Salmonella Contamination: Indian spices have been found to be contaminated with salmonella, a frequent bacterial cause of foodborne illness.
• Equipment and Utensil Contamination: FDA inspections of MDH’s manufacturing plant revealed inadequate sanitary facilities and contamination of equipment and utensils.
• Quality Rejection: India's spices have faced constant rejection over quality issues, with the EU notably rejecting Indian spices due to failure to meet quality requirements.
• Trade Wars: Trade wars aimed at reducing global spice prices have impacted India's spice exports, despite export earnings doubling in the past four to five years.
• Infrastructure and Logistics Challenges: Inadequate infrastructure and logistics hinder the transportation of spices from production centers to ports for export.

GOVT.SCHEMES TAKEN UP

WAY FORWARD

• Swift Investigations: Conduct thorough investigations and promptly publish findings to restore global trust in Indian spices. Firms found guilty of contamination should face immediate consequences.
• Enhanced Sampling and Inspection: Increase the sampling size of spices inspected by the Spices Board and the Food Safety and Standards Authority of India (FSSAI).
• Market Diversification: Diversify Indian spice exports into emerging markets to reduce reliance on traditional markets such as the US, EU, and Middle East.
• Infrastructure Upgrades: Improve storage facilities, transportation networks, and port infrastructure to reduce transit times and maintain the freshness of Indian spices.

PRACTICE QUESTION

Q: How can India ensure the sustainable growth of its spice exports amidst quality concerns and market challenges? Discuss.(10M,150W)