1

A

GLOBAL / COUNTRY STUDY AND REPORT

ON

“Dehydrated spices industry of India and positioning it in Uganda”

Submitted to

Gujarat Technological University

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ASMINISTRATION

UNDER THE GUIDANCE OF

Nirav Vyas

Assistant Professor

Submitted by

MBA SEMESTER IV STUDENTS

----------------------------------------------------------------------------------------

Shree Jaysukhalal Vadhar Institute of Management Studies, Jamnagar

MBA PROGRAMME

Affiliated to Gujarat Technological University

2

Preface

Uganda, the country which has been in existence since very long but still not very well known to

most part of the world. The country is still looked as a ―third world country‖ and when it comes

to business opportunities world-wide, then absolutely no one or very less entrepreneurs show real

interest in Uganda. This is very orthodox and conventional way of looking towards any country

for business.

Uganda is ranked among the 20 top fastest development economies of the world and is the 4th

fastest developing economy of Africa. It is situated in Western Africa and is improving and

strengthening its economical and urbanization position slowly but very steadily.

This project is an attempt to explore the country as a market place and to position a specific

Indian industry to do business with it and also it is an attempt to find out opportunities for

Gujarati Enterprises to position themselves in that country as entrepreneurs.

The first part of the project enlightens on factors like the overview of economy, demography,

topography, prevailing industries and their contribution to GDP of Uganda. In the last section of

the first part of the project we have tried to find out certain business in which the Indian

enterprises can really look into for business

The second part of the project enlightens the opportunities of doing business and positioning a

particular Indian industry in Uganda. The industry that we have selected is dehydrated spices

industry. This part enlists, the current scenario of this industry in India, its export potential, its

acceptability and demand in Uganda, the current trade barriers, norms and policies of export of

spices in India as well as norms of imports of spices in Uganda and finally the business

opportunities.

3

Acknowledgement

We are very grateful first of all to Gujarat Technological University for giving such a project

work to us as a full credit subject. This indeed expands our horizons and gives us a feeling that

our management course is not just restricted to traditional and conventional studies but it

includes such kind of work which can be called as contribution from us towards the economy of

India.

We express our deepest and sincere gratitude towards our institute, JVIMS- Jamnagar, for being

fully supportive and giving us all the access and facilities that we needed to complete this

Herculean task.

We are finally very thankful to Dr. K J. Thankachan,- Director, JVIMS and Dr. Ajay D. Shah-

Dy. Director, JVIMS for being patient and very kind to us, supporting us, correcting our errors

and mistakes and also being there always as a information point whereby we could get all the

needed information which was difficult for us to collect for completing this project.

4

Table of Content Sr. No Topic Page No.

1 Preface 1

2 Acknowledgement 2

Part – 1

3 Introduction to Uganda 5

4 Demographic Profile of Uganda 6

5 Economic Overview of the Uganda and Political Conditions 9

6 Contribution of different sectors towards economy of Uganda 12

7 Domestic and International Trade 15

8 Taxation Policies 21

9 Present trade with India 24

10 Opportunities for entrepreneurs of Gujarat in Uganda 26

Part – 2

11 Justification of selective dehydrated spice industry 28

12 Introduction to spice industry of India and comparative study of the sector between India and Gujarat

30

11 Overview of current business functions and exports of spices 37

12 Potential for Import and export of spices 48

13 Present Position and Trend of business with India during last 3 to 5 years

62

14 Present trade barriers in exporting spices to Uganda 71

15 Norms, Policies and procedures for exporting spices from India 77

16 Norms, Procedures and formalities for import of spices in Uganda

84

16 Business opportunities for future in Uganda 94

19 Conclusion 100

5

Introduction

Uganda is situated in western Africa and is regarded as one of the 20 fastest developing

economies of the world. The country initially was formed soon after the second world war when

the whole of African continent was undergoing rapid and unexpected political changes and

unrest. Since then the country‘s dictator Idi Amin had driven the country into haphazard and

unorganized development.

However, after its true republican independence, the country has steered its wheels on the tracks

of development thoroughly. While, the majority of the development in African continent was

from big economies like South Africa, Kenya, Egypt and Libya, Uganda kept on improving its

basic industry of agriculture and came on the maps of overall development.

Our effort in this project is to first study the basic details of Uganda and then to position an

Indian based industry for doing business with Uganda.

6

Chapter 1

Demographic and

Geographical Details

7

Uganda is situated in Africa Continent. It is one of the countries in Africa which has recently

showed signs of development.

Uganda got its independency in the year of 1962 from United Kingdom. However soon after

independency it was a dictatorship economy and recently it has declared itself as a republican

democracy.

The only geographical disadvantage that the country suffers from is that it is a land-locked

country and the nearest port is situated in Kenya which proves to be a little hurdle as far as

foreign trade is concerned.

The total population of Uganda is 34.612.250 which is divided into the following ethnic groups

Ethicity Percentage in total population

Baganda 16.9%,

Banyakole 9.5%,

Basoga 8.4%,

Bakiga 6.9%,

Iteso 6.4%,

Langi 6.1%,

Acholi 4.7%,

Bagisu 4.6%,

Lugbara 4.2%,

Bunyoro 2.7%,

other 29.6%

Largely, the population is Christian but it also has a substantial amount of people following other

religions too. The following table shows the religion bifurcation of the country

Roman Catholic Christian 41.9% of total population

Protestant Christian 42%

Muslim 12.1%

Others 4%

Urbanization Details

8

The following table shows the urbanization and the rate of urbanization in Uganda.

Urban Population Rate of urbanization

13% of total population (2010) 4.8% annual rate of change (2010-15 est.)

We can say that a large part of the population still have a habitat in the rural areas. It is very

similar to the Indian conditions and hence we can also say that the businesses and products

which cater to the rural population‘s demand will flourish more in Ugandan economy.

The following table shows the literacy rate of the country

Literacy Rates

Definition Total Population Male Female

Age 15 and over can

read and write

66.8% 76.8% 57.7%

Languages

English (official national language, taught in grade schools, used in courts of law and by most

newspapers and some radio broadcasts), Ganda or Luganda (most widely used of the Niger-

Congo languages, preferred for native language publications in the capital and may be taught in

school), other Niger-Congo languages, Nilo-Saharan languages, Swahili, Arabic

9

Chapter 2

Overview of economy

And

Political condition

10

Overview of economy

The Ugandan economy is largely dependent on production of agricultural products. This is the

sector which employs 82 percent of the total workforce of the country.

These goods range from crops grown mainly for subsistence purposes such as plantains, maize,

beans, and potatoes, and exported cash crops such as coffee, tea, and tobacco.

The economy is not dependent on any other economy as far as basic food items are concerned

and its transportation infrastructure was one of the best in the continent. Basically it exports the

cash crops like coffee and cotton and that were highly in demand globally as the world economy

was registering substantial growth built on the import demands of the United States, Western

Europe, and parts of Northeast Asia.

The following table shows the picture of the economy

Labor Force 15.01 million

Budget Revenues $ 2.007 billion

Budget Expenditures $ $2.508 billion

Industrial production growth rate 5.3% (2009 est.)

Industrial production growth rate 5.3%

Current account balance -$829 million

Exports $3.151 billion

Imports $4.106 billion

Foreign exchange reserve $2.296 billion

External debt $2.05 billion (2009 est.)

All the figures are according to the census and budget of 2009.

On a whole it can be said that Ugandan economy is not still in the best of its shape but it has

shown signs of development and very positive signs. The country is regarded as one of the

fastest developing economies in the entire world.

11

Political condition

Uganda is a presidential republic, in which the President of Uganda is both head of state and

head of government; there is a multi-party system. Executive power is exercised by the

government. Legislative power is vested in both the government and the National Assembly.

Uganda is divided into districts, spread across four administrative regions: Northern, Eastern,

Central (Kingdom of Buganda) and Western. The districts are subdivided into counties.

The head of state in Uganda is the President, who is elected by a popular vote to a five-year term.

The current president is Yoweri Museveni, who won the election in 1996 and again in 2001,

2006 and 2011. Uganda follows as mixed legal system of English common law and customary

law. Country‘s constitution provides for freedom of speech, religion, and movement. Press and

civil society enjoy relative freedom. Uganda has a unicameral and democratic parliamentary

system of government consisting of multiple parties. Legislative power rests both with the

Government of Uganda and the National Assembly. President is both head of state and head of

government.

After the civil war and suppression by Idi Amin- the then, dictator of Uganda, Mr Museveni has

been given the credit of bringing about relative stability and economic growth of the country.

Recently, in 2011 the controversial bill of Institution and Cultural Leader‘s bill was passed in the

country which stops traditional and cultural leaders from engaging in politics which will help in

building a secularist and stable economy.

12

Chapter 3

Contribution of

different sectors

towards economy

13

Contribution of different economic sectors towards economy

Agriculture Sector

Agriculture and especially the cash crops continues to be the number one sector which

contributes a lot to the GDP of the economy. Crops like cotton, tobacco, cereals, oilseeds, nuts,

orchids, flowers and silk are the major crops which consists of a large part of the total exports

from the country.

Tourism Sector

Since 1998, the country is regarded as politically stable and comparatively safe country to visit.

The geographical location of Uganda is where the savannah meets the west African jungle.

The country has got a very nice scenery and has great and beautiful lakes, green hills, deep

forests and nature parks. Recently eco tourism have gained a lot of interest in world‘s community

as far as Uganda is concerned.

The tourism sector is yet developing but it has started a very well and enough amount of

contribution towards the economy.

Despite all the glamour outlined about, Uganda is a relatively newcomer to today‘s international

tourism scene, which has benefited both the country‘s natural environment and the tourism

experience it offers.

Energy Sector

Uganda is among the top 20 fastest developing economies of the world. The urbanization rate is

also considerable and there is an increment in the demand of energy on individual and

organizational level. The energy sector has started contributing a substantial amount in GDP of

the economy.

The Government of Uganda have joined hands with the domestic businesses houses and is also

welcoming foreign organization to start energy plants in Uganda with a partnership of the

Ugandan Government.

.

Education Sector

14

Primary education, however, is still considered the first level of formal education in which pupils

follow a common basic curriculum. After the completion of the advanced certificate of education

the students can either: proceed to university; join a two-year course leading to ordinary diploma

in teacher education, technical education; business studies or join departmental programmes.

Leather Sector

Uganda hides and skins are naturally of high quality, high texture and heavy substance which are

suitable for the production of excellent heavy upper and vegetable tanned sole leather. On

average, a Ugandan hide weighs 16 kg and has 29 ft2 of which about 15 – 20% can be used for

upholstery, making Uganda the only country in East Africa with larger quantities of hides that

are suitable for upholstery.

15

Chapter 4

Domestic and

international trade

16

Domestic and International Trade

Since 1987, there has been significant reform in economic sector of Uganda. These reforms have

attracted foreign direct investment. Mainly the FDI has arrived in manufacturing sector. The

trade reforms have been implemented because of the policy of liberalization.

However, there are certain problems which hinder the trade of Uganda. Mainly the insufficient

infrastructure and the land lock status of Uganda proves to be the biggest hindrance in trading of

the country.

The following are the trade reforms implemented by the Ugandan Government in order to put the

economy on a speed gear post liberalization

Plan for Modernization of Agriculture is a scheme which is promoted by the Government of

Uganda to enhance the development of its main business which is agriculture

National Agricultural Advisory Services (NAADS) which is a semi autonomous body are

formed to develop a farmer-led agricultural delivery-service system and also which is

demand driven for the lower economic class of farmers.

A giant plan for expanding the railway network is also set up by the Government of Uganda.

The Government is trying to develop train links between northern Uganda to Southern Sudan

and also between Western Uganda to Eastern Congo. Rail network is the only way through

which the country can develop its business as there are no ports in Uganda which is a land

locked country.

Apart from a few service sectors, the major part of the sector which also includes primary

and manufacturing industries are fully open for direct FDI (Foreign Direct Investments) and

also to foreign equity ownership.

Electricity transmission and distribution sector is a sector in which the foreign capital

participation is not permitted. Also there is a rule in the country which restricts a

shareholding of more than 49% by a single shareholder in a local bank in this sector.

17

If any foreign investor wants to secure an investment license from the Uganda Investment

Authority then he/she needs at least US$100,000 in planned investment. Similarly for a local

investor he/she needs at least US$50,000.

Discounts and concession on import duty, sales tax and some other taxes are provided to

investors who import any plant, machinery, vehicles or even construction material.

Domestic Trade

Agriculture sector accounts for 70% of employment in the country and this is the only sector

which contributes to 38% of real GDP. There is also a considerable increase in GDP share of the

service sector which contributes to 42%. This steep increase in service sector is due to increase

in service industries like education, hospitals and telecom services.

International Trade

Uganda‘s major exports comprises of cash crops like coffee, cotton, tobacco and tea. However,

there is a steep decline in world prices of these crops which ultimately have resulted into a fall in

earnings from exports. However there is an upward trend in the total exports of these goods but

the earnings continues to remain lesser. As discussed earlier also, agriculture still remains the top

contributing sector in the exports which accounts for 70% of the value of total exports.

Trade Reforms

Putting tariffs have always been a major policy instrument in Uganda. It has applied customs

valuation methods on transaction value since last decade. Uganda has also attempted to simplify

the tariff structure by reducing the band numbers from 5 to 3. This policy is in alignment with

other East African Customs Union common external tariff. Apart from tariffs, there are other

duties like import licence commission of 2%, withholding tax of 4% as well as excise duty of

12%.

Sectoral Trade Policies

Trade policies in the Agricultural sector have been characterized by diversification of

18

agricultural exports towards non traditional crops and liberalization of the marketing of inputs

and products. Export taxes have been eliminated except on coffee. Trade barriers have been

substantially reduced and prices are market determined. The Government's 2000 plan for the

modernization of agriculture (PMA) formulated within the PEAP framework, aims to re-orient

the activities of subsistence farmers to the market. The maximum tariff rate of 25% applies to

imports of certain vegetables, fruit and nuts and specified animal and fishery products.

Because of land locked position of the country which increases the prices of utilities for

manufacturing sector which in turn gives a very low capacity utilization to most of the industries.

However the country has given attractive incentive schemes to attract investments in to the

manufacturing sector. Imported manufactured goods are subject to the tariff bands of 0%, 10%

and 25% on raw materials, intermediate and consumer goods respectively.

Services constitute a promising sector for Uganda. The government is divesting its ownership in

financial services where there are currently no financially based ownership restrictions except for

deferring minimum capital requirements between Ugandans and foreigners. Most of the sub-

sectors have undergone autonomous liberalization and privatisation except the rail transport

services still under the monopoly of the state owned Uganda Railways Corporation. Uganda has

made specific commitments in tourism and travel related services. And in telecommunication

services under the General Agreement on Trade in Services (GATS)

International Trade and Finance

The twenty-thousand Ugandan shilling bank note, issued by the Bank of Uganda.

Since assuming power in early 1986, Museveni's government has taken important steps toward

economic rehabilitation. The country's infrastructure—notably its transport and communications

systems which were destroyed by war and neglect—is being rebuilt. Recognizing the need for

increased external support, Uganda negotiated a policy framework paper with the IMF and the

World Bank in 1987. It subsequently began implementing economic policies designed to restore

price stability and sustainable balance of payments, improve capacity utilization, rehabilitate

infrastructure, restore producer incentives through proper price policies, and improve resource

mobilization and allocation in the public sector. These policies produced positive results.

19

Inflation, which ran at 240% in 1987 and 42% in June 1992, was 5.4% for fiscal year 1995-96

and 7.3% in 2003.

Investment as a percentage of GDP was estimated at 20.9% in 2002 compared to 13.7% in 1999.

Private sector investment, largely financed by private transfers from abroad, was 14.9% of GDP

in 2002. Gross national savings as a percentage of GDP was estimated at 5.5% in 2002. The

Ugandan Government has also worked with donor countries to reschedule or cancel substantial

portions of the country's external debts.

Uganda is a member of the WTO.

Trade Balance

Agricultural products continue to dominate National exports, with Coffee remaining a leading

earner of export revenue however its overall share has fallen dramatically from 60% in 1999 to

19% in 2003. The declining share of the coffee sub-sector in Uganda's export earnings, reflects

the decline in world coffee prices, however through interventions such as the SEP, the Sector has

sought to alleviate the effect of low prices by targeting the export of organic coffee to niche

markets allowing exporters to add-value to their coffee produce.

20

Indian organization doing business in Uganda

The following are the leading Indian organizations which have established their businesses in

Ugandan economy

• Bank of Baroda

• United Telecom Limited

• The Energy and Resource Institute (TERI)

• Tata Group

• McLeod Russel India

Road master Cycles

• Mahindra Tractors

• Tungabhadra Steel Products Limited

• Hindustan Machine Tools

• RITES Limited

21

Chapter 5

Taxation Policies

22

Taxation policies

This section will give information regarding the various taxes which are implied by the Ugandan

Government. Basically in Uganda, there are both, direct and indirect taxes which are

implemented.

Direct taxes are to be levied on individual income or business income and indirect taxes are

levied on sale of products as well as on land rates.

The following are the principal taxes which are levied by the Ugandan Government

Principal Taxes:

1) Income tax

Income tax is the principal tax levied by the Ugandan Government. Income tax is levied on

individuals and also on organizations. It is calculated on the individual's net assessable income

after making allowance for deductible expenses

2) Value Added Tax

Value Added Tax, customs, and excise duty levied by the Central Government through the

Uganda Revenue Authority and Graduated Tax and land rates, which are levied by local

authorities. When a VAT payer buys goods and services he pays VAT as an input Tax. Certain

goods and services are exempt from VAT. A person registered for VAT cannot claim an input

tax on exempt goods and services. Similarly, such person cannot charge VAT (as an output tax)

on goods and services exempt from VAT.

VAT on exports is Zero-rated.

3). Pay as You Earn (PAYE) Tax and Taxation of Employment Benefits:

PAYE is not a separate tax. It is an instalment income tax system under which employers are

required to deduct tax instalments from their employees' salary or other employment income.

The instalments so deducted are remitted to the Uganda Revenue Authority (URA) and based on

the PAYE tax return lodged by the employer, the total amount deducted from the individual

employee is offset against the employees' tax liability upon the lodgement of the annual tax

return by the employee at the end of the tax year. Every employer must, therefore, register for

23

PAYE as well as be familiar with the rules relating to filing of PAYE returns and the

computation of PAYE.

Penalties apply where the employer fails either to deduct or remit PAYE, or deducts and remits

incorrect amounts. For example, the URA can require the Employer to pay any PAYE shortfalls.

4). Taxation of Companies and other Business Entities:

A corporate tax is levied on companies, partnerships and sole proprietorships. Any income

arising out of any trade, profession, vocation or adventure in the nature of trade is taxable under

special rules applicable to business entities.

The income of all companies accruing or derived from Uganda is taxable. A company is liable to

pay tax separate from its shareholders. The sources of income of a company on which the tax can

be levied include profits and gains from any business carried on for whatever period of time.

Other sources include dividends from shares in other companies, and interest from use of the

company's property.

4. Value Added Tax (VAT):

VAT is a consumer expenditure tax. VAT registration for individuals and firms with business

sales turnover of above the Shs 50,000,000 VAT threshold must register with URA for VAT.

24

Chapter 6

Present trade with

India

25

Present trade with India

India‘s trade with Uganda is based mainly on agro and para-agro based products. Mainly India

exports agricultural products like coffee, tea, sugar, spices etc. with Uganda

The commodities which are imported from Uganda is basically wool, cotton, and other similar

items.

In the last one and a half decade the trade with Uganda has seen an increasing trend. The reasons

being less trade barriers in the country and also high demand of agricultural products.

The CAGR growth of exports from India to Uganda from 2006-2007 to 2010-2011 is 3.89

Areas of trade and investment

The following kind of products have a huge demand in Ugandan markets.

Agricultural Products (Spices, Chickory, Coffee, Sugar etc.)

Pine wood

Garments and rayon

The following graph shows the date of the trade in the years of 2006-2007 to 2010-2011

The total trade globally with Uganda in the year 2010-2011 was 310.66 million US$, out of

which 298.93 million US$ were total exports and 11.73 million US$ were the total imports.

26

Chapter 7

Opportunities for

entrepreneurs of

Gujarat in Uganda

\

27

Opportunities of Entrepreneurs of Gujarat in Uganda

In order to know the opportunities for Gujarati enterprises in Uganda, we should first understand

and know the business, which are of a lot of potential in Ugandan Markets. The following

business are rated as the most demanded in Ugandan markets. We have also identified the

requirement of capital for these business.

Segment Capital required Demand

Clothing Moderate High

Grocery items exports Moderate High

Selling entertainment products Low Moderate

Restaurants High Moderate

Education High High

Health High High

Transport High Moderate

Agricultural products and

Agro based products

Moderate High

Information Technology High High

Looking at the current trend in Gujarati enterprises and the current small scale industries in

Gujarat, it can be interpreted that Agricultural products and Garments can be considered as

prevailing opportunity in Ugandan market

28

Global Country Report

Uganda- Part II

Dehydrated Spices

Industry

29

Reasons for positioning spice industry of India in Uganda:

Spices are the main ingredients of any food almost across the globe. Without spices almost any

food is tasteless and also is not eatable most of the times. Organic production in Uganda is

continuously growing, along with demand (both internationally and locally) for organic products.

Because of the natural advantage of Uganda, a number of exporters and producers have joined

forces to promote their organic products.

―Naturally, Uganda is a God gifted country, and the majority of Uganda agricultural practices are

organic‖, said Mansoor Nadir, chairman of the Jambo Africa group and director of Uganda Corp.

Industries Ltd. Being a landlocked country, Uganda benefits greatly (when it comes to transport)

from cooperation between producers for accessing the international market. The group decided

to start the export of organic agricultural produce to other countries.

Ugandan agriculture sector is very developing and is also a sector which contributes to the

maximum GDP of the economy. The following table shows the major crops which are produced

in Uganda and are getting exported.

Crops Production (million of tones)

Oil seeds (mainly sunflower and soy) 0.31

Cereals (maize, millet, rice) 2.10

Tubers (cassava, potatoes) 5.80

Pulses (beans, g/nuts,) 0.52

Plantain 9.30

______________________________________________________________________________

Source: Compiled by APSEC

Because of some geological and geographical restrictions, the country is not able to produce

certain spices which are essential for food.

Our effort here is to target certain dehydrated spice and position them in Ugandan economy. We

have selected spices like turmeric powder, onion flexes, pepper, cardamom, etc.

30

Chapter 8

Introduction to spice

industry of India:

31

History of dehydrated spicies:

An Indian spice is more than 7000 years old. Centuries before Greece and Rome were carrying

Indian spices, perfumes and textiles to Mesopotamia, Arabia and Egypt. And that brought many

seafarers to the shores of India. Greek merchants thronged the market of south India, buying

several expensive items including the spices.

With the arrival of the Muslims the scenario changes further. Categories of spices were used in

Muslim preparations and the usage was popularized throughout the nation under Muslim rule.

And later on it become a part of the Indian cuisines.

Under Colonial rule the Indian spice trading changed. Arabian traders were quite popularizing

the Indian spices in different corner of the world. Arabian traders were able to earn good money

supplying these spices even after paying high price to Indian middle men.

Sandalwood, turmeric, saffron, coriander and a host of other Indian spices were exported from

India to other parts of the world. The Indian spices also use in alternative medicines. Ayurveda

makes use of several herbs that are also used for the cookery purposes.

India spices are used both as cookery and medical ingredients.

Status of spices in India and Gujarat:

As the demand of the Indian spices is increasing day by day the production of the spices as well

as dehydrated spices is increasing. The million tone production of total spices is also higher i.e.

5.28 in the year 2009 compare to 5.06 and 4.66 in the respectively year 2008 and 2007.1

It is not only used for the cookery purposes but also useful as medicine. People are much aware

about the Ayurveda and they are consuming the product which is made up of the ayurved. Even

the toothpaste companies are also consuming the spices for manufacturing the paste.

Source:

1 As per Spices Board of India

32

From the below table we can conclude that the production of the spices is increasing though the

area of production is reducing. Chilis, Garlic, Turmeric are the 3 spices which has produced in

large quantity.

2Table No. 1

Area wise Production of DEHYDRATED SPICES in India

2 Source: Spices board of India

Source: www.indianspices.com

2006 – 07 2007 - 08 2008 - 09

Name of Spices Area Production Area Production Area Production

Pepper 236177 50000 196297 50000 181074 46745

Cardamom(Small) 73228 11235 69280 9470 71170 10999

Cardamom(Large) 30039 4303 30039 4920 27034 4300

Chilli 809437 1325273 836684 1371250 801070 1353796

Ginger 129014 721539 120056 710476 138479 795028

Turmeric 183917 856464 175947 826030 194358 892213

Corriander 361767 287647 458473 286377 507935 416663

Cumin 409033 176511 477936 264860 527132 283000

Fennel 61128 92260 84479 131652 74149 114277

Fennugreek 44984 55780 54965 67645 103097 95833

Garlic 169612 833157 219814 1088800 194274 1009116

Vanilla 5129 233 4734 182 4477 169

Clove 1941 742 1902 716 2172 1002

Nutmeg 13709 11564 14921 11217 16400 11362

Cinnamon 530 27 530 27 186 37

Tamarind 58624 190073 55682 188278 54222 193873

Dill seed 11083 9679 15912 18465 8620 11522

Ajwan 31657 15850 19590 11196 20776 16299

Saffron 2928 4.85 3000 5 3000 9

Celery 1799 2350 3158 4239 4117 5329

Tejpat 6140 15961 6646 17277 6646 17277

33

Evaluation of the above table:

Cardamom(Big): In the year 07-08 the production was 4220 million tones which was

increase by 4300 million tones in the year 08-09.

Cardamom (Small): In the year 07-08 the production was 9470 million tones which was

increased by 10999 million tones in the year 08-09.

Chili: In the year the production was 1371250 million tones which was reduced by

1353796 million but on the other hand the production area in the year 2008 was 836684

which was reduced to 795028 in the year 2009.In the end we can say that though the

production was reduced in the year 2009 but on the other hand the area of production was

also reduced.

Turmeric: In the year 2008 the production was 826030 million tones which was increased

to 892213 million tones.

Coriander: In the year 2008 the production was 286377 million tones which was

increased to 416663 million tones.

Garlic: In the year 2008 the production of garlic 1088800 million tones which was

increased to 1009116 million tones.

Cinnamon: In the year 2008 the production was 27 million tones which was increased by

37. The area of production was 530 which was reduced to 37, than also the production

was increase by 10 million tones.

Clove: The production of the clove was 716 million tones in the year 2008 which was

increased by 1002 million tones in the year 2009.

Vanilla: The production of vanilla was 182 million tones in the year 2008 which was 169

million tones in the year 2009. The area of production was 4374 hector in year 2008

which reduced to 4477 hector in year 2009. Fennugreek: In the year 2008 the production

was 67645 million tones which was increased by 95833 million tones in the year 2009.

STATE WISE PRODUCTION :

In the year 2007 the total production of Andhra Pradesh is 1210667 tons Arunachal Pradesh is

45300 tons, Assam 183660 tons, Bihar is 19088 tons and Chhattisgarh is 8608 tons.

GRAND TOTAL 2649075 4664210 2850045 5063082 2940388 5278851

GRAND TOTAL

IN MLN TONNES 4.66 5.06 5.28

34

As per the state wise spice production the production of Gujarat State is also increasing in the

year 2007 as compare to 2005 & 2006. In the year 2005 the production was 395300 tons, in year

2006 it increase to 486978 tons and in the year 2007 it reached up to 599256 tons. Therefore by

comparing the figures of the production we can say the spices demand is increasing.

The major productions of spices in Gujarat which are increasing year by year are coriander,

Fennel, Ajwan, Garlic, Coriander like other spices contain antioxidants which is useful for

preventing the food spoilage. It is also a traditional treatment for diabetes.

Table No. 2

Production of DEHYDRATED SPICES in Gujarat

State/Spice

2004 – 05 2005 - 06 2006 - 07

Area (Hec.)

Prodn (Tons)

Area (Hec.)

Prodn (Tons)

Area (Hec.)

Prodn (Tons)

Gujarat

Chilli 24640 26520 31650 37840 33320 46730

Ginger 1830 26920 2840 39170 2969 38140

Turmeric 1020 14120 1400 16510 1297 16909

Corriander 9860 10630 8670 18420 10690 19789

Cumin 208141 106975 267920 147615 259217 152845

Fennel 34265 46450 36251 57236 51467 84331

Fennugreek 4857 7014 4851 5934 3720 5236

Ajwan 4628 3744 2270 1294 7675 3368

Dill Seed 10076 8567 4832 3819 6564 7838

Garlic 28520 144360 40120 159140 37710 224070

Total 327837 395300 400804 486978 414629 599256

_____________________________________________________________________________________________

Source: Spice Board of India

Evaluation of the above table:

In the year 2005-06 the production of Corriander was 18420 tons which was increased by

19789 tons in the year 06-07. In the year 2006 the production of Fennel was 57236 tons which

was increased by 84331 tons in the year 2007. In the year the Ajwan production was 1294 in

year 2006 which increased by 3368 tons in year 2007. The Garlic Production in the year 2006

was 159140 which was increase by 224070 tons.

35

The powder of Chilli, turmeric, garlic is exported by most of the manufacturer from Gujarat. The

production of fenugreek in the year 2006 was 5851 tons which was reduced by 3720 tons in

2007. However the hector wise production was reduced in the year 2007. The fenugreek was also

used more in Ayurveda. It is beneficial in skin irritation. It is also useful in solving digestive

disorders, respiratory infections, mouth ulcers, dandruff.

ESTIMATED EXPORT OF SPICES:

Table No. 3

Estimated Export of Spices from India

SPICES

TARGET FOR

2011-2012

APRIL 2011 TO JANUARY

2012

QTY. VALUE QTY VALUE RATE

PEPPER 20000 45000 22300 72078.25 323.22

CARDAMOM(S) 1500 12000 3900 30832.28 790.57

CARDAMOM(L) 1000 5000 710 5272.5 742.61

CHILLI 225000 143500 169500 160408 94.64

GINGER 10000 9000 13650 15728.02 115.22

TURMERIC 50000 50000 67000 64376.8 96.08

CORIANDER 35000 14500 22600 13396.85 59.28

CUMIN 35000 40000 34500 49477.05 143.41

CELERY 4000 3000 3050 1978.55 64.87

FENNEL 6000 6000 6100 5711.7 93.63

FENUGREEK 17500 6000 17700 5890.2 33.28

OTHER SEEDS (1) 12500 6000 7550 4081.15 54.06

GARLIC 15000 5500 1250 928.8 74.36

NUTMEG & MACE 2000 10000 3100 20458.51 659.95

OTHER SPICES(2) 25000 16000 30700 27570.8 89.81

CURRY POWDERS/PASTE 15000 21000 13950 20292.5 145.46

MINT PRODUCTS 17750 165000 12800 181342 1416.73

SPICE OILS &OLEORESINS 7750 92500 5815 105123.53 1807.8

TOTAL 500000 650000 436175 784947.49 6804.98

______________________________________________________________________________

Source: Spice Board of India

The value of the spices is increase in the foreign market as the demand is high. Though the

quantity is reduced by 436175 from targeted 500000 the value in million US$ increase from

1450 to 1647.39.

The production of Pepper was target 20000 quantity which was achieved 22300 quantity in the

year 2011-2012. The production of Cardamom was target 1500 in the year 2011-12 which was

achieved 3900 quantity .The quantity of ginger was also achieved i.e. the targeted was 10000

36

which was achieved 13650 in the year 2011-12.The spices Fenugreek is also achieved as the

decided target.

Share of spice industry in Indian economy and Gujarat :

For the last one decade, spice exports have registered substantial growth. The average growth

rate is 13.1% annually. In 2010, it brought revenue of around `5560 crore to India. The country‘s

share of global spice market is 48% by volume and 44% by value according to Spice Board of

India.

Indian chilli is the most appreciated spice outside India. One third of the export market is

dominated by only chilli, which is 33%. Seed spices (Cumin, Ajwain, Mustard,etc.)are also

preferred abroad and they have a market share of 22%. The US is the most popular destination

for Indian spices. With its health benefits and varied tastes, Indian spices are finding more

international markets.

Opportunities of dehydrated spices in Uganda:

Considering overall import of Uganda, India ranked 3rd amongst the top 5 country exporting to

Uganda. In the year 2006 the export value was US 208.99 Million which later on in 2007

reached to US 344.97 Million and in the year 2008 it increased to US 470.49 Million. Following

spices are having opportunities in Uganda as they are produced in the highest quantity in Gujarat.

Dehydrated Garlic Powder Dehydrated Coriander leaves

Dehydrated Curry leaves Dehydrated Red Onion powder

Ajwain Chillies

37

Chapter 9

Overview of current

business functions and

exports of spices from

India

38

The Spices Board India (Ministry of Commerce, Government of India) is the apex body for the

export promotion of Indian Spices. It was established in 1987. The Board has been with the

Indian Spice industry for development activities and selling in new markets. The Board plays a

far reaching and influential role as a developmental, regulatory and promotional agency for

Indian Spices industry.

The Indian export of spices crossed the 450 million US dollar mark during 1999-2000. From a

traditional agricultural produce and small enterprise, spice trade in India has developed

manifolds. It has been one of the substantial contributors to total exports for Indian economy.

Spices exports have registered substantial growth during the last five years, registering an annual

average growth rate of 21% in value and 8% in volume. During the year 2010-11, spices export

from India has registered an all time high both in terms of quantity and value.

In 2010-11 the export of spices from India has been 525,750 tonnes valued Rs.6840.71 crores

(US $ 1502.85 Million) as against 502,750 tonnes valued Rs.5560.50 crores (US $ 1173.75

Million) in 2009-10, registering an increase of 28% in dollar terms of value and 5% in volume.

India commands a formidable position in the World Spice Trade with 48% share in Volume and

44% in value.

INDIA'S SHARE IN WORLD TRADE OF SPICES 2010

_____________________________________________________________________________

3 Source: http://www.indianspices.com/html/s0420sts.htm

Major exports to Uganda:

• Dehydrated spices & whole spices

• Electrical machinery and equipment

• Boilers & machinery

39

• Articles of Iron and steel

• Plastic and related articles

• Organic chemicals

Major Imports from Uganda:

• Cocoa and cocoa preparation

• Edible vegetables

• Raw hides and skins

This report outlines a strategy for India‘s competitive success in the processing and export of

spices. It distills assessments of India‘s opportunities for and constraints on achieving

competitiveness. The competitiveness of India‘s spice industry is hindered by marketing and

procurement problems. For instance, in 2001, most Indian spices were sold to importers and

brokers rather than to their true customers—food manufacturers, food service providers, blenders

of dry seasoning mixes, and pharmaceutical or cosmetics manufacturers. In addition, the

industry‘s quality-neutral ―commodity trading‖ approach, which aims to find a market or a

source for the greatest possible volume of spices, has led to a number of procurement and

production problems.

To orient India‘s spice industry to its customers, all members of the trade—growers, handlers,

brokers, processors, and exporters—need to understand how customers judge quality and how

processing technology can affect purchasing decisions. To become more competitive, the

industry needs timely information about customer requirements and a coordinated approach to

selling spices and derivatives that meet those requirements.

The business strategy should be focused on three initiatives:

• Market distinctive & natural spices - This initiative aims to help Indian marketers of whole

spices compete in Uganda markets, serving customers that cater to consumers who appreciate the

distinctive taste, aroma, or color of whole spices.

• Market dehydrated spice - This initiative aims to help Indian marketers of essential spices and

other products to compete in Uganda serving customers that cater to consumers who appreciate

the distinctive taste, aroma, color, or other more flexible uses and product application

possibilities of Indian dehydrated spices.

40

• Improve the quality, quantity, and consistency of the spice supply. This initiative will seek to

strengthen linkages between exporters and processors and organized small-holders, stimulate

plantation interest in spices, and improve services to growers.

Business structure:

On the global plane, Uganda is one of the promising country with which India trades. Even

though statistics show that the inter-play is largely in favour of India, the countries enjoy

relations dating back to the 1900s when Indians first stepped in Uganda to build the railway.

The growing and processing of spices provides cash income to a wide range of rural Indians,

particularly smallholders. Most of the exporters sell dehydrated onion powder, garlic powder,

ginger powder, cinnamon, pepper, cloves, etc. to different parts of Uganda. India has developed

an edge as a producer of dehydrated products which find ready market in Uganda, where this

sector is very young. India subsidizes its agricultural sector, a factor that makes Uganda's

predominantly agricultural based exports less competitive with those that are produced in India.

India is now the second biggest exporter to Uganda. Exports constitute around 8.5% of Uganda‘s

total imports. Information at the Uganda Investment Authority (UIA) shows that India is

potentially, the largest investor in Uganda. Economic and technical co-operation between India

and Uganda have steadily increased.

Uganda's trade with India has grown to about 13 per cent of total trade turnover fuelled by

demand in agri-products, raw materials for chemical products and industrial related machinery.

41

4

4 Source: http://focusafrica.gov.in/Trade_overview_3-5years_Uganda.html

4

42

Trade between India and Uganda has been growing gradually and stood at US$44 million

in the 1999 – 2000 financial year and has grown by over 8% during the first 6 months of

the 2010-2011 financial year. Trade between the two countries has grown exponentially

over the past decade, the sheer size of India's trade volume, which is doubling after every

two years is a positive indicator. In 2006, Uganda imported from India goods worth

US$208m compared to Uganda's exports to India worth US$1.7 million. Uganda is a

beneficiary of a unilateral offer by India to some African countries to export to the Asian

country at reduced custom duties. India has also recently announced that in partnership

with the government of Uganda, it is going to set up an institute, headquartered in

Uganda, called India-African Institute of Trade in order to promote trade between the two

countries.

Industry constraints and opportunities: According to the American Spice Trade Association, a spice is ―any dried plant product

used primarily for seasoning purposes.‖ Spices include ―tropical aromatics,‖ leafy herbs

from the temperate zone, spice seeds, and dehydrated vegetables that may be used to add

flavor or aroma to foodstuffs, beverages, pharmaceuticals, cosmetics, and household and

personal care items. They are occasionally used as the functional agent (e.g., air

fresheners). All spices exported from India are tropical aromatics.

Spices come in two forms:

• Whole &

• Ground (powdered, dehydrated or fragmented form of the whole spice)

The essential oils and derived forms concentrate one element of the original spice but,

except for oleoresins, lose complexity. For tropical aromatics, whole spices are normally

the dried version of the fruit, flower, or bark of the tree. Some—cinnamon quills, cloves,

cardamom—may be used whole in the preparation of foods or beverages. All are also

ground into a powder and frequently mixed with other spices before use in a recipe.

Essential oils are normally extracted from lower quality whole spices or, in the case of

cinnamon, from the leaves of the cinnamon tree. The quality of these raw materials is

often inadequate to meet the minimal requirements of an essential oil, thus distillers also

buy better quality spices to upgrade the finished product. Distillers therefore compete

43

with traders for whole spices. Whole spices, essential oils, and oleoresins are partially

interchangeable. Some products, especially essential oils, have unique applications.

According to McCormick, a leading spice marketer, essential oils consist of ―volatile,

aromatic ‗top notes‘ of a spice or herb.‖

Business operations:

It is assumed that the unique attributes of Indian spices correspond to the taste

preferences of consumers who have been introduced to them and that these consumers

will continue to prefer them over time. It is also assumed that some food manufacturers

and blenders of dry seasoning mixes, once introduced to Indian spices, will be able to

justify their inclusion in foods and mixes and be willing to differentiate such products on

a basis that persists over time.

Given these assumptions, two constraints remain:

(1) No industry presence in importing countries and

(2) Inadequate and inconsistent supply of spices of good quality. In importing countries,

the Indian spice industry would be well served by establishing a permanent presence for

furthering the interests of all groups trying to sell their products.

The following operational needs must be met:

• Marketing: Develop the best possible understanding of consumer preferences and

how the attributes of Indian dehydrated spices best match them; gain access to

and build long-term relationships with key food manufacturers (and their

equivalents in the cosmetics, pharmaceutical, and other industries); develop a

flexible marketing and promotional approach for Indian marketers; gather and

analyze market intelligence continuously, particularly on taste trends.

• Operations: Develop capability to deliver spices directly to customers; exert

supply and inventory control; sterilize spices before shipment.

• Procurement: Ensure consistent access to spices of a type and quality that meets

the needs of consumers in the target market.

44

• Finance: Gain access to investment and working capital at competitive interest

rates and find ways to use the funds available to rural growers and small

businesses creatively.

• Management: Devise a general plan for managing overseas representatives.

• Trade: Prepare for a lengthy campaign to bifurcate under different harmonized

system codes true cinnamon and cassia, first ensuring that the item is on the

International Customs Union‘s agenda for the Brussels Convention to be held in

2003.

Adding value in the business process:

In order of importance, these are the sales and marketing, distribution, customer service,

procurement, and administration segments.

Sales and marketing: Marketing distinctive, natural spices will require stronger sales and

marketing capabilities at the company level and intra-industry collaboration to learn

customer preferences.

Distribution: The spice industry consists mostly of smaller companies. Developing

distribution systems that ensure the customer gets the right product, at the right time, and

in the right amount will be a significant challenge. Coordination and cooperation in

filling orders could lead to bigger contracts and lower costs.

Customer service: Achieving and maintaining the Ceylon quality reputation will require

much closer interaction with customers. Commanding a premium price requires not only

a good product, but also good service—timeliness, consistency, and responsiveness.

Procurement: Attaining consistent product quality will require developing grading and

sourcing systems. It should also help develop stronger integration with the growers to

realize improvements at the early stages of the value chain.

Administration and management: Greater integration with the growers, increased

cooperation among processors and traders, and more complex distribution networks will

require sophisticated monitoring and administrative procedures and management

technology.

45

Business functions:

A. Purchasing: The inherent color, pungency, and aroma of the spice is related to the soil

conditions, rain pattern, relative humidity of the location and above all the cultural

practices the farmer employs. So, it is very important from where it is purchased. The

purchase team has to take utmost care in the selection and procurement of specific raw

materials from specific locations so that it gets the required quality and purity. Purchasing

works closely with contract farming, backward integration and vendor quality.

B. Processing: The production facility contains adequate numbers of fluid bed driers,

sifting, milling and blending equipments to handle the required volumes. Modern

technology, good manufacturing practices and stringent quality control on raw materials,

processes and finished products ensure high quality and product consistency. Processing

focuses on grader, driers, metal detectors, weighing scales, stitching machines, etc

C. Quality Assurance: To ensure superior quality of product, all the process such as

cleaning, processing, and filling, weighing and packing should be done under personal

supervision. Following the stringent norms for quality, company should get ISO 22001,

that ensure that all our products are high in quality and contains no added flavor or

chemical.

D. Packaging: Special care should be taken while packing. Packing should be available as

per the importers needs.

E. Warehousing: As a characteristic of product, each product requires to be stores in cold

storages, heater rooms, warehouses, etc. Proper care is required to be taken in order to

retain the qualities of the spices.

F. Logistics: The product needs to be dispatched in bulk quantities to buyer. The product

should be packed in an appropriate carriage to carry the product in its original quality. In

46

long distance dispatches care is to be taken about temperature in the vehicle. Appropriate

climate control carriage vehicles are to be used. As a matter of fact, it will increase the

cost

SWOT Analysis of Spice Industry of India: Strengths

• Major producer of spices globally

• Most fertile land

• Has International trade unions & thus get preferential treatment in spice trade.

• Easy availability of raw materials.

• Social acceptability of agriculture

• support from the central government.

• largest population engaged in agriculture.

• Large network of manufacturing facilities

• Vast domestic market

Weakness

• Low productivity

• Poor product quality at farm level

• Insufficient infrastructure

• Lack of scientific storage & processing

• Insufficient mechanization

• Unable to meet quality req. of developed nations

• Poor linkage between R&D labs & Industry

Opportunities

• Large crop & material base due to agro ecological variability offers huge potential

• Integration of technology (biotech, material science etc.) is increasing

productivity

• Opening of global markets allows access to developed technologies and facilitate

higher production and storage capabilities

• Advances in genetic engineering enable crops to be naturally resistant to diseases

47

• Improving export trends

Threats

• Competition from global players

• Some countries have no domestic market for their produce and thus sell at cost

price (e.g. Cardamom from Guatemala, Pepper from Vietnam & Cloves from

Indonesia)

• Loss of trained manpower to other industries and professions

Rapid development in contemporary requirements of the industry fast lead to

obsolescence

48

Chapter 10

Potential for import

and export

49

Major spices produced in India :

Now a days spices, seeds and herbs are still valued for their culinary and medicinal

products. The Indian spice industry is the hottest in export market that has been

witnessing a magnificent growth over the last few years. Out of the 109 spices listed by

the ISO, India produces as many as 75 in its various agro climatic regions. India accounts

for about 45% (2,50,000 tonnes-2002-03) of the global spice exports and its estimated

annual production of 3.2 million tonnes (2002) is valued at approximately $4billion,

which holds a prominent position in world spice production.

With the different colors and flavors the Indian spices stimulate the appetite and enhance

our enjoyment of food. Used in small quantities, spices are of little nutritional value with

their intense and different flavors, spices can be a healthy alternative to salt in the diet.

Spices such as juniper, cloves and pepper have long been used to improve the flavor of

preserved food as well as to make bland, staple foods more appetizing. A few contain

compounds that can cause adverse reactions in susceptible people.

Practitioners of alternative medicine have ascribed specific health benefits to certain

spices. Although the majority of their claims have not been substantiated by scientific

studies, many of the remedies have been used for hundreds of years. It is a common

misbelieve that peptic ulcers are caused by a spicy diet. In fact, recent research suggests

that a bacterium is the usual culprit while herbal medicine spices such as cardamom and

ginger are actually used to aid digestion.

Indian spices have been creating a niche market in the international market is herbal-

based products, a market that is valued at an estimated $62 billion and is growing 15 %

per annum. India is one of the world's most important cradles of herbs, but its share in the

global market is very small, especially compared to China's 33 per cent. In terms of

value, the annual exports are just about Rs 300 crore.

50

An export figure of around 0.25 million tonnes, India accounts for around 37% of the

export volume and 23% of the export value. The major destination of Indian spice

exports is USA followed by EU, Sri Lanka, Japan and Middle East countries. The major

items exported from India (2003-04) are pepper (7%), chilli (33%), turmeric (14%), seed

spices (22%), spice oils & oleoresins (7%), others, including cardamom, cinnamon,

cloves, ginger, saffron, etc. (17%). India meets around 70% of the world demand for

spice oils & oleoresins.

Indian spices exporters :

1.Gayatri Global- India

Deals in cumin seeds, red chilli, whole coriander seeds, ground coriander seeds,

fenugreek seeds, fennel seeds, mustard seeds, sesame seeds, natural sesame

seeds, hulled sesame seeds, yellow mustard seeds, soya flour, soya chunks, soya

lecithin, bajra, sorghum, maize, corns, flours, wheat flour, gram flour, besan, suji,

ginger, spices, seeds, seeds like coriander seeds...more

Business Type : Exporters / Wholesale Suppliers / Manufacturer

Market Cover : Middle East, Gulf and Eu Market.

Address: 106, 2nd Floor Classic Centre 575 M. G. Road, Indore, Madhya Pradesh India

Phone(s) : 91-731-4009391 Mobile : 9827241457 Fax(s) : 91-731-2530377

2.East India Company- India

Deals in construction aggregates, granite stones, black granite stones, silver pearl

granite stone, granite products, granite slabs, granite tiles, pickles, spices, textile

yarns, cotton yarns, polyester yarns, maize

Business Type : Exporters / Wholesale Suppliers / Manufacturer

Address: 59a-15-28, Pantakaluva Road, First Floor, Ntr Cirlce, Patamata, Vijayawada,

Andhra Pradesh India

Phone(s) : 91-866-2486374 Mobile : +91-9966767424 Fax(s) : 91-866-2486374

51

3.Aggarwal Impex – India

They are exporters of pulses, spices, red lentil, peas, dun peas, chick peas, black

matpe, toor dal, cement etc.

Business Type : Importer / Exporters / Wholesale Suppliers

Address: Plot 74, Sector 28, Vashi, Navi Mumbai, Maharashtra India

4.Shalom International – India

They are Exporters of agricultural products, seeds, spices, fruits, vegetables etc.

Business Type : Exporters / Wholesale Suppliers

Market Cover : All over the Globe

Address: D-316, Bhoomi Green, Raheja Estate, Kulupwadi, Borivali (east)., Mumbai,

Maharashtra India

Website : http://www.shalominternational.co.in

5.Spices Mount Exporters Private Limited - India

They are exporters of spices, cardamom, green cardamom, black pepper,

organic tea, herbal tea, herbal coffee, ginger, nutmeg, garlic, cinnamon, clove,

turmeric etc.

Business Type : Manufacturer / Exporters / Wholesale Suppliers

Market Cover : Soudi, Kuwait, Uae, Usa,Uk,Australia

Address: C.S.I Building, Near Employment Exchange, Kattappana South P.O, Idukki,

Kerala India

_____________________________________________________________________________ Source: www.spiceshill.com. www.shalominternational.co.in, www.agarwalimpex.in, www.balajidhananjay.blogspot.in

52

Last six years prices of different spices:

________________________________________________________________________

____

Source: DGCI&S. Calcutta/shipping bills/exporters returns

53

Major spices Exported from Gujarat :

Following are the spices in which we deal:

Black Pepper :- In 2009-10, India exports black pepper 19750 quantity

when 2010-11, India exports black pepper 18850 quantity. In 2010-11

quantity less compare to Qty 2009-10. India is making loss in exporting

Indian dehydrate spices.

Dry Ginger :-In 2009-10, India exports dry ginger 5500 quantity when

2010-11, India exports dry ginger 15750 quantity. India is making profit

exporting Indian dehydrate spices.

Turmeric:-In 2009-10, India exports turmeric 50750 quantity when 2010-

11, India exports turmeric 49250 quantity. India is making loss exporting

Indian dehydrate spices.

Cardamom:-In 2009-10, India exports cardamom 1000 quantity when

2010-11, India exports cardamom 775 quantity. India is making loss

exporting Indian dehydrate spices.

Curry Powder:-In 2009-10, India exports 14300 quantity when 2010-11,

India exports curry powder 15250 quantity. India is making profit exporting

Indian dehydrate spices.

54

Major buyers in uganda :

Spices exports have registered substantial growth during the last five years, registering an

annual average growth rate of 21% in value and 8% in volume. During the year 2010-11,

spices export from India has registered an all time high both in terms of quantity and

value. In 2010-11 the export of spices from India has been 525,750 tonnes valued

Rs.6840.71 crores (US $ 1502.85 Million) as against 502,750 tonnes valued Rs.5560.50

crores (US $ 1173.75 Million) in 2009-10, registering an increase of 28% in dollar terms

of value and 5% in volume. India commands a formidable position in the World Spice

Trade with 48% share in Volume and 44% in Value.

55

Top Companies from Uganda which are associated in trade with India :

Jay Fortune Limited

Are you looking for a reliable business partner for the export of

fresh fruits and vegetables and an assortment of grains and seeds

from Uganda? You have found the right address. All year round,

Jay Fortune delivers fruits and vegetables to its clients.

Member since 4 March, 2011 from Kampala, Uganda

Selling: sweet potato, ginger, okra, beans, fresh pineapples,

scotch bonnet pepper, millet, sesame seed, soy bean.

Halal-Clean

Halal-Clean is an indegenous Ugandan company that deals in

Halal products. The company strictly adheres to principles of fair

trade and quality assurance. We buy from farmers that respect the

environment and reward them fairly. We also act as agents.

Member since 14 April, 2007 from Kampala, Uganda

Selling: honey, training, coffee, maize, tea, vanilla, consultancy,

education, fresh produce.

TheGoldNile

The Gold Nile is a hybrid (with both non-profit and profit motive)

company dealing in African Agricultural resources. Right now we

are majorly dealing in the extraction of Ugandan Coffee (both

Arabica and Robusta) for export to United States.

Member since 23 July, 2010 from Entebbe Uganda, Uganda

56

Total demand of Indian spices in Uganda :

Onion Powder:- 90%.

Out of total consumption of onion powder, 90% is exported to Uganda.

Ginger:- 21.67%.

India exports around 22% of total demand of ginger to the Uganda.

Turmeric:- 80%.

Out of total consumption of turmeric 80% is exported from India.

Garlic powder:- 90%.

Around 90% of total demand of garlic powder is exported to Uganda.

Legal procedure for trading in Uganda

1. Guidelines to suppliers

When exporting goods into Uganda, there are formal governmental procedures to

be taken into consideration.

The write out below will describe the procedures that have to be followed and

also state what is required from the supplier at different stages.

Unless the following guidelines are followed, there will be delays in the shipment

of goods, clearance and delivery to the final customer.

57

2. GATT (General Agreement on Tariff and Trade) System

Uganda Revenue Authority i.e. Uganda Customs & Excise follows the GATT

system for valuation of imports in to Uganda.

In this system, the CIF-value up to port of entry is used for the purpose of

calculating applicable import duties & taxes.

3. Shipping Documents

Airfreight Shipments original documents

1) Air Way Bill

2) Supplier Invoice(s)

3) Packing List

4) Customs export declaration / export entries from the country of exportation

(w.e.f. 01/Jul/2007)

5) Importer‘s TIN and VAT numbers

6) Insurance certificate, if cargo is insured

7) Evidence of payment i.e. copy of TT transfer, copy of Letter of Credit, copy of

Performa Invoice

8) Export Entries from the country of supply/export

9) Duties and Taxes Exemption Certificates, if any

10) National Drug Authority Certificate / Permit for import of drug and pharmaceuticals

Sea freight Shipments original documents

1) Bill of Lading

2) Supplier Invoice(s)

3) Packing List

4) Customs export declaration / export entries from the country of exportation (w.e.f.

01/Jul/2007)

5) Importer‘s TIN and VAT numbers

6) Insurance certificate, if cargo is insured.

7) Sea Freight & Inland Freight Invoices

58

8) Evidence of payment i.e. copy of TT transfer, copy of Letter of Credit, copy of

Performa Invoice

9) Export Entries or Shipping Bills from the country of supply/export

10) Duties and Taxes Exemption Certificates, if any

11) National Drug Authority Certificate / Permit for import of drug and

pharmaceuticals

4. Additional Documents required for specific imports

1) Phyto-Sanitary certificates for import of agricultural products

2) Registration / De-registration Card of country of origin of old/used vehicles

3) Gift Certificates, if gifted to any organization eligible for duty free clearance

4) Passport of the individual for clearance of personal effects

5) Certificate of Origin especially for goods imported from COMESA countries

Pre-shipment Inspection:

Pre-shipment inspection is not required for the purpose of customs clearance of imports

int

Uganda.

5. Imports which are prohibited or restricted

Prohibited Imports:

1) Fire arms

2) Post office equipment

3) Electricity supply specialized equipment

4) Pornographic materials

5) Imports banned under international agreement where Uganda is a signatory

59

Duties and Taxes of Uganda

Customs and other import duties (% of tax revenue) in uganda :

The Customs and other import duties (% of tax revenue) in Uganda was 11.60%

in 2009, according to a World Bank report, published in 2010.

The Customs and other import duties (% of tax revenue) in Uganda was reported

at 11.47% in 2008, according to the World Bank. Customs and other import

duties are all levies collected on goods that are entering the country or services

delivered by nonresidents to residents.

They include levies imposed for revenue or protection purposes and determined

on a specific or ad valorem basis as long as they are restricted to imported goods

or services.

Uganda is one of the world's poorest countries. In spite of high GDP growth rates

recorded in recent years, most of the population lives in poverty.

Customs regulations of Uganda :

TWO clear negotiable Original Bills of Lading,

copy of the air waybill

A detailed valued inventory in English,

If the inventory is not valued then we will require an overall value of the goods

for customs purposes.

A valid work permit before they can import their goods to Uganda.

The consignees original passport NOT a copy

A Tax Identification Number, will be issued and obtained for the consignee by the

consignee local employer in Uganda.

Import regulations by Uganda customs:

Customs authorities may enforce strict regulations concerning temporary

importation into or export of items such as firearms, religious materials,

antiquities, medications, business equipment and other items .

60

It is advisable to contact the Embassy of your destination country in Washington

or one of that countries consulates in the United States for specific information

regarding customs requirement.

Labling and packaging regulations:

The following information must be clearly marked on imports and exports:

Importer/ exporter name, consignee, flight/vehicle details, place of discharge,

number of packages, container identity, description of goods, air way bill

number/bill of lading, and country of origin/ destination.

Markings and packaging for foods and medicines should meet internationally

recognized packaging procedures.

Import restrictions in Uganda:

Restricted Imports:

1. Drugs

2. Live animals

3. Wild endangered species

4. Explosives

5. Military hardware

6. Seeds and plants

7. Specialized communication equipment

8. High voltage electric wires and transformers.

9. Cigarettes

10. Used motor vehicle tyres

61

Duty drawback : 0904 Pepper of the genus

Piper; dried or

crushed or ground

fruits of the genus

Capsicum or of the

genus Pimenta

1% 1%

0905 Vanilla 1% 1%

0906 Cinnamon and

Cinnamon-tree

flowers

1% 1%

0907 Cloves (whole fruit,

cloves and stems)

1% 1%

0908 Nutmeg, mace and

cardamoms

1% 1%

0909 Seed of anise,

badian, fennel,

coriander, cumin or

caraway; juniper

berries

1% 1%

Food dehydration has been around for a long time and has been used by many different

civilizations to preserve food. It essentially reduces the water content of food by using air

warmed to low temperatures. The reduction in the foods moisture content means that

moulds, yeasts and spores cannot grow on the food and spoil it.

Dehydration has the great advantage of preserving the essential nutritional values of the

food including enzymes that help our bodies have a feeling of great energy and vitality. It

can be used as an alternative to freezing or in combination with freezing to further

expand the time a food can be preserved for.

62

Chapter 11

Present Position and

Trend of business

with India during

last 3 to 5 years

63

EXPORT OF SPICES FROM INDIA (last five years) TO UGANDA

Product wise export of spices to Uganda

Product(qty.

M.T)

2006-07 2007-08 2008-09 2009-10 2010-11

pepper 14.3 26.35 15.251 13.15 19.15

cardamon 0.2 0.3 0.5 0.5 0.45

chilly 86.9 117.45 140.75 123.45 123.45

ginger 28.8 0.3 0.4 0.05 6.3

turmeric 109.75 92.15 106.05 115.6 94.6

coriander 16 91.5 44.6 109.75 119.5

cumin 24.5 30.5 37.1 36.95 39.4

celery 9.6 8.65 8.75 10.4 11.15

fennel 6.2 13.55 13.6 10.45 6.6

fenugreek 33.25 49.95 55.35 46.6 45.8

Nutmeg &

mace

4.35 2.35 4.05 4.8 8.5

Curry powder 3.15 7.75 19.2 29.95 16.65

mint 5.85 1 3.85 6.65 4.7

Trend of export of spices to Uganda

Total export of spices to Uganda is increase gradually from 2006-07 to 2009-

10.but its decrease in 2010-11.the reason for decrease in export is might be

increase in price or other external factors.

Among the product all mention above from that export of turmeric is very

high.

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Quantity (

M.t)

334.85 463.3 474.7 536.45 533.2

64

Trend analysis product wise 1. Pepper :

Interpretation: Export of pepper to Uganda increases from 2006-07 to 2007-08 but it is

decrease in 2009-10. And increase in 2010-11 so the trend of export of pepper in Uganda

is quite fluctuating.

2. Cardamom:

Interpretation: Export of cardamom is increase from 2006-07 to 2008-09.and remain

stagnant in 2009-2010 and slightly decrease in 2010-11.

65

3.Chilly:

Interpretation: Export of chilly is increase drastically from 2006-07 up to 2009-10 and

remains stagnant in last two years that is 2009-10 and 2010-11.

4.Ginger :

Interpretation: Export of ginger is drastically decreased in 2007-08 in compare to 2006-

07.and then gradually increase up to 2010-11.

66

5. Turmeric:

Interpretation: Export of turmeric is very fluctuating during last five years it decreased in

2007-08.and increased in two years 2008-09 and 2009-10.and decreased in last year.

6. Coriander:

Interpretation: Export of coriander increased in 2007-08 and again decreases in 2008-09

and drastically increases in last two years.

67

7. Cumin:

Interpretation: Export of cumin is gradually increase from 2006-07 to 2008-09 and then

slightly decrease in 2009-10 and increase in last year.

8. Celery:

Interpretation: Slightly decrease in export of cumin in 2007-08, 2008-09 in compare to

2006-07.and gradually increased in last two years.

68

9. Fennel:

Interpretation: Fennel export is increase up to 2008-09.then gradually decrease in last two

years.

10. fenugreek:

Interpretation: Export of fenugreek increase up to year 2008-09 and then slight decrease

in last two years.

69

11. Nutmeg & mace:

Interpretation: Export of nutmeg and mace is decrease in 2007-08 in compare to 2006-

07.and gradually increase in last three years.

12. Curry powder:

Interpretation: Export of curry powder is increase up to year 2009-10 then slightly

decreases in last year.

70

13. Mint :

Interpretation: Export of mint is really fluctuating during last five years. That is increase

in year 2007-08, 2008-09 and decrease in 2010-11.

________________________________________________________________________

______

Reference: these are not absolute data .sources for this is with the discussion with

exporter. Milanbhai Shah

71

Chapter 12

Present trade

barriers for export

to Uganda

72

The Ugandan National Bureau of Standards (UNBS) has implemented a new product

conformity assessment programme for the control of certain categories of imported

consumer goods.

The new programmes, to be known as Pre-Export Verification of Conformity (PVoC) to

standards were implemented from 9th June 2010. The objective of the PVoC is to ensure

that all imports of regulated products act in accordance with the approved Ugandan

technical regulations, (i.e. Ugandan or other approved international standards), prior to

shipment.

Objectives and Principles:

The primary objective of applying the PVoC programme is to:

a. Ensure quality of products, health and safety, and environmental protection for

Ugandans and this is reflected in the scope of the regulated products.

b. Minimize the risk of unsafe and sub-standard goods entering Uganda through the

implementation of conformity assessment activities in the country of export. This will

help ensure that consumers are protected from unsafe and sub-standard goods, and that

Ugandan manufacturers are not subjected to unfair competition.

c. The guiding principle of the PVoC programme is based on Article 5 of Technical

Barriers to Trade (TBT/WTO), which requires that technical requirements (i.e.

Standards) applied to foreign products must also be applied to domestically manufactured

products.

Key Features:

Every consignment of imported goods, which contain regulated products, shall be

accompanied by a Certificate of Conformity (CoC) issued by the PVoC Country Offices

(offices operated and managed by authorized PVoC Contractors) prior to shipment.

• The PVoC Certificate is required to ensure smooth Customs clearance of shipments

in Uganda.

73

• The PVoC certificate confirms that the products comply with relevant Ugandan

technical regulations and/or approved standards.

• Regulated product shipments can be exported through three routes depending upon

the type of exporter and frequency of shipments

• The PVoC incorporates elements of conformity assessment; consignment inspection

based on product risk assessment and product registration schemes to provide

exporters and importers with maximum flexibility in demonstrating compliance with

the approved technical regulations.

• The Programme applies to all the countries except the East African Partner States

namely, Kenya, Tanzania, Rwanda and Burundi.

ROUTE A – CONSIGNMENT CERTIFICATION:

Under Route A, products to be shipped have to be both tested and physically inspected to

demonstrate conformity to relevant standards, essential requirements or manufacturer‘s

specification.

This route is open to all products being exported by either traders or manufacturers. This

Route is open to any trade party.

The certification process through Route A is as outlined below:

a. Submission of Request for Certification (RFC) by the Exporter

b. Review of RFC/ Documentation submitted by Exporter to PVoC Contractor

c. Consignment Inspection by the Appointed Inspector

d. Consignment Testing

e. Issuance of the Final Certification Document (Certification Decision/CoC) by the

PVoC Contractor

ROUTE B – PRODUCT REGISTRATION AND CERTIFICATION OF

SHIPMENT:

Route B offers a fast track certification process for goods with reasonable and consistent

levels of quality through Registration of such products by the PVoC Contractor.

74

Product Registration is recommended to exporters having frequent shipments of

homogenous products.

The process of Registration and certification is as follows:

a. Product Registration

Submission of Registration Application to PVoC Contractor by the Exporter

Review of Registration Application submitted by Exporter to PVoC Contractor

b. Registered Product Consignment Certification Process

Submission of Request for Certification (RFC)

Consignment Inspection by the Appointed Inspector

Random Consignment Testing

Issuance of the Final Certification Document (Certification Decision/ CoC) by the

PVoC Contractor

ROUTE C – PRODUCT LICENSING:

This route is open only to manufacturers who can demonstrate existence of a quality

management system in their production/ manufacturing process. It involves auditing of

such production processes and licensing of products manufactured thereof by authorized

PVoC Contractor.

This route is recommended for manufactures that have high frequency/volumes of

shipments.

The Licensing process includes:

a. Product Licensing

o Submission of Licensing Application to PVoC Contractor by the Exporter

o Review of Licensing Application submitted by Exporter to PVoC Contractor

o Type testing of product

o Periodic factory surveillance in line with ISO Guide 28

b. Licensed Product Consignment Certification Process

o Random consignment inspection by the Appointed Inspector

o No consignment testing

o Issuance of the Certificate of Conformity (CoC) by the PVoC Contractor

75

FLOWCHART DEPICTING THE CERTIFICATION ROUTES:

Routes of Certification

Route A

Routes of Certification

Route B

Routes of Certification

Route C

CONFORMITY ASSESSMENT FEES (VERIFICATION FEES):

Type of Certificate Route Ad valorem fee as a percentage of the declared FOB value

Minimum Fee

(USD) Maximum Fee

(USD) Shipment Certification (CoC) A 0.523% 250.00

7,000.00

B 0.45% 250.00 7,000.00

C 0.25% 250.00 7,000.00

Note: Shipments of FOB value up to USD 1000 are not covered under the Uganda PVoC;

such shipments will be inspected by UNBS on arrival at Ugandan Ports

INVENTORY OF NTBS(Non Tariff Barriers) THAT AFFECT EXPORTS:

During the EAC NTBs consultations, it was found out that a number of NTBs affect the

ability of Ugandan businesses to export, which have been reaffirmed in the current

consultations.

These NTBs(Non Tariff Barriers) fall under the following clusters.

1 Customs documentation and administrative procedures

Problems experienced under this cluster include incapability to share customs

information online with Kenya due to incompatibility of systems used to clear exports/

imports, limited customs hours, and burdensome and expensive customs procedures

regarding exports to Tanzania.

76

2 Transiting procedures

Uganda being a landlocked country critically depends on its neighbors Kenya and

Tanzania to provide it access to the sea and Trade Facilitation services which include rail,

road, sea freight, port, clearing and forwarding services. Also the numerous weighbridges

along the main road transport routes like the Northern corridor makes it difficult to

transport goods to destination markets on time. The time and costs involved in accessing

these services are considered uncompetitive, which act as NTBs.

3 Sanitary and Phytosanitary Measures

Problems involved under this cluster include standards, time spent during inspection in

export destination markets especially Kenya, and lack of harmonized procedures for

issuance of certification marks within EAC.

4 Immigration procedures

Many Ugandans lack an EAC passport which makes it difficult to travel across borders in

search of business opportunities. Also, work permits are a requirement in Tanzania and

Kenya, making it difficult to open branches and therefore penetrate the markets of these

two countries.

5 Police roadblocks

There are too many roadblocks along the major road transport routes, which greatly

interrupts efficient movement of goods to the markets. Also, Ugandan exporters claims

that Kenyan Police frustrate Ugandan transport trucks since they are not registered in

Kenya, which acts as an obstacle in choosing the most competitive means of transport for

Ugandan exports.

6 Government Participation in Trade and Restrictive Practices Tolerated by

Governments

Problems experienced under this cluster include burdensome business registration and

Licensing

7 Local supply of Dehydrated spices in Uganda

There are local suppliers of dehydrated spices in Uganda which can act as one of the

trade barrier.

77

Chapter 13

Norms, procedures

and formalities for

exporting spices

from India

78

Spices Board India:

Spices Board (Ministry of Commerce, Government of India) is the flagship organization

for the development and worldwide promotion of Indian spices. The Board is an

international link between the Indian exporters and the importers abroad. The Board has

been spearheading activities for excellence of Indian spices, involving every segment of

the industry. The Board has made quality and hygiene the corner stone‘s for its

development and promotional strategies.

Multi faceted activities

• Promotion of exports of spices and spice products

• Maintenance and monitoring of quality of exports

• Development and implementation of better production methods, through scientific,

technological and economic research.

Guidance to farmers on getting higher and better quality yields through scientific

agricultural practices.

• Provision of financial and material support to growers.

• Encouraging organic production and export of spices.

• Facilitating infrastructure for processing and value addition

• Registration and licensing of all spice exporters.

• Assistance for studies and research on better processing practices, foolproof quality

management systems, improved grading methods and effective packaging techniques.

• Production of promotional and educative materials in a variety of media for the

benefit of exporters and importers.

Exporters Registration :

To start with any export, one has to obtain Import-Export Code Number issued the office

of the Director General of Foreign Trade. In all foreign trade as well as foreign exchange

documentation you have to mention IE code number.

In case of export/import of Spices/Spice products, Certificate of Registration as Exporter

of Spices issued by the Board is also required in addition to the IE Code number. Spices

Board issues Certificate of Registration as Exporter of Spices [CRES] under Section 11

of the Spices Board Act.

79

The documents to be furnished /formalities to be fulfilled for obtaining the Certificate of

Registration as Exporter of Spices are as follows;

• Application in the prescribed Form [Form-1]

• Self attested copy of IE code certificate

• Registration fee of Rs. 5000/- (Rupees five thousand only) in the form of crossed

Demand Draft favouring ―Spices Board‖. The DD should be drawn on any

scheduled Bank payable at ―Ernakulam‖.

• Confidential Bank certificate in prescribed format in sealed cover from your

banker in support of your account/financial status.

• Self certified/attested copy of partnership Deed/Memorandum & Articles of

Association as the case may be [not applicable to Proprietorship firm].

• Self certified/attested copies of Sales Tax Registration (CST/VST/VAT)

certificate.

• Self attested copy of SSI certificate or the certificate issued by the Directorate of

Industries in case of Manufacturer-exporter of spices.

• Self certificate copy of PAN card

• Passport size photo preferably with white background of the CEO or the

designated officer of your firm duly mentioning the name of the person and the

company represented for issue of ID card.

The Centre has relaxed the period of export obligation for spices import to 120 days for

pepper, cardamom and chilli and to one year for other spices. Earlier, the export

obligation for all the spices was within 90 days from receiving the first import

consignment.

Government.relaxations on export:

The government allows imports at concessional duty against an export obligation for the

same quantity to be fulfilled within a preen Dingxi city of north-west China's Gansu

province, vice-minister for agriculture, Wei Chaoan, said that for China, with a huge

population, limited land and shortage of water resources, it is very difficult to expand the

area of irrigated farm land.

80

We believed that potato, with features such as resistance to drought, cold and wide

adaptability, has great potential for expansion in sown areas and per-unit output

Export promotion:

The Centre has approved Rs 192.69 crore for export development and promotion of

spices to give a boost to the spices industry in the country. The allocated amount will be

provided to the Spices Board during the 11th Plan period.

The Cabinet Committee on Economic Affairs gave its approval for the "Export

Development and Promotion of Spices Scheme" with an outlay of Rs 192.69 crore for

implementation during the11th Plan period by the Spices Board.

According to official sources, the scheme is a continuation of a similar scheme

implemented by the Spices Board during the 11th Plan period with some modifications in

contents and outlay.

The main thrust of the scheme is to promote high-tech and high-end value addition in

spice processing/packing and quality control facilities for producing quality products;

setting up of spices parks having common processing facilities and world class

infrastructure for facilitating growers and exporting community to improve the quality of

spices and motivate new entrepreneurs, promote product research to establish the health

and medicinal values of spices; support spice processors in the north-east and organic

spice producers elsewhere to enter into high-end value addition; trade promotion

activities like market research, surveys, mounting trade delegations, trade fair

participation, publicity programmers etc. and strengthening market / trade information

services.

Apart from other assistance, financial assistance to 150 exporters in the general area and

10 exporters in north-east /special areas to produce value added spice products of

international standards and quality; to meet part of their expenditure on trade promotion

activities like packaging development/bar coding etc, 100 exporters will be supported.

For providing common facilities for cleaning, grading, packing and storing, the scheme

will have six such centres for quality improvement and value addition, it is learnt.

81

Spices export to break record:

Spices exports are poised for a record-breaking performance having crossed the target

fixed for the whole year with one more month left. Exports during the 11 months of fiscal

2007-08 have crossed the target in dollar terms (107%) and rupee terms (105%), while

reaching 99% in volume terms.

During the period April-February, 3,77,000 tonnes of spices valued at Rs 3785.40 crore

($940.47 million) were exported from the country. The target fixed by the Board for the

current FY is 3,80,000 tonnes valued at Rs 3,600 crore ($875 million). Export has

registered an increase of 16% in volume and 19% i9n rupee value terms (34% in dollar

terms), when compared to the same period of the last FY.

Export of pepper, chilli, curry powder and mint products have exceeded the targets in

terms of both volume and value. Exports of coriander and cumin have exceeded the target

in value terms and vanilla in volume terms. The performance of cardamom, ginger,

turmeric, cumin, celery, garlic, nutmeg and mace fell short of last year's achievement.

Export of pepper from India is seen higher by 20% in volume and 68% in value as

compared to the last year's achievement of 26,415 tonnes valued at Rs 276.79 crore

India is likely to export a record 1,90,000 tonnes of red chilli in 2007-08, up 28%year on

year, on strong global; demand due to poor crop in competing countries, according to an

official from the Spices Board. The world's biggest producer and consumer of the red

spice, India had exported 1,48,500 tonnes in 2006-07. "This year overseas demand is

good. Considering the present trend we could export 1,90,000 tonnes by March end, more

than export target set by the board," the official said. The state-run board had set an

export target of 1,35,000 tonnes for 2007-08.

"Lower Chinese output has been helping India. This year its crop was not good and it will

help Indian exporters throughout the year," the official said. India and China are the

largest exporters of chillies in the world with 25% and 24% share of total global exports,

respectively. Malaysia, Bangladesh, Sri Lanka and Pakistan are the main buyers of the

Indian spice in 2007-08. The appreciation of the rupee against dollar hadn't impacted

chilli exports as neighbouring Pakistan and Bangladesh had also harvested less crop and

overseas demand was robust, according to a trader.

82

Increase in spices:

According to the Spices Board, India exported 2,86,302 tonnes of spices valued at

$700.95 million in the first eight months of the current fiscal year against 2,38,334 tonnes

worth $492.93 million in the corresponding period last year. However, due to a 12%

appreciation in rupee value, growth in rupee terms was less at 26%. Performance of

pepper, cardamom (large) chilli and seed spices like coriander, celery, fennel and

fenugreek has been better than last year

It's boom time for Indian spices. Beating the rupee appreciation blues, spices exports

from India have soared 42% in dollar terms during April-November 2007 over the same

period last year.

According to the Spices Board, India exported 2,86,302 tonnes of spices valued at

$700.95 million in the first eight months of the current year against 2,38,334 tonnes

worth $492.93 million in the corresponding period last year.

However, due to a 12% appreciation in rupee value vis-a-vis dollar in the current year,

export growth in rupee terms was recorded at 26%. The rupee value of spices exports

increased from Rs 2,255.13 crore to Rs 2,840.03 crore in the comparable periods. In

volume terms, spice exports grew 20%.

Against targeted export of spices fixed at 380,000 tonnes with an approximate value of

Rs 3,600 crore ($875 million) for the year, the achievement so far is 75% in terms of

quantity and 79% in terms of value.

The performance of pepper, cardamom (large), chilli and seed spices like coriander,

celery, fennel and fenugreek was better than last year. Value added spices like curry

powder, spice oils and oleoresins and mint products also did better.

With Vietnam yet to enter the global market with its 2007-08 pepper crop, Indian pepper

exporters got the advantage of pushing the spice exports in the world market in the past

two months.

83

India can be a major player:

Through appropriate interventions, India can position itself as a source and mark of

quality agri-produce particularly to seek large orders in the production of fruits, flowers,

medicinal plants, organic produce and other such goods, says an analytical report on agri-

business and food processing presented by YES Bank at the INDIAN MERCHANTS'

CHAMBER's "Global Trade & Investment Conference: India Your Partner" held on

January 10- 12, 2008 in Mumbai.

One major revenue source could be through enterprises that can market the processed and

value added produce from such crops and alternative products such as medicinal oil

extracts, flower extracts etc. Agriculture marketing is an important sub-system of agri-

business, say the report's joint authors Tushar Pandey and Antonio R da Piedade

Menezes.

The authors submit that the strategy for improvement of marketing agri - produce should

be an implementation-oriented strategy that would, among other things, better returns to

farmers, lower marketing costs, reduce wastage, identify the gaps which hinder growth

and business viability and support initiatives to build an umbrella brand name for

"Produce of India" or similarly for a specific region.

Contributing 6.3 % of the country's GDP, the Indian food processing sector is an

important contributor to the national economy. The importance of the food processing

industry is further underscored by the fact that it contributes to the employment of 13

million people and has the propensity to generate 2.4 times more indirect employment

than the direct employment generated. The sector witnessed a high growth rate of over 7

% in the last decade and is poised for higher growth (expected to reach 10 % by 2010)

While the total processed food industry (including primary processed foods such as

milled grains) is valued at Rs 5300 billion, the high value added food segment is

estimated at Rs 2000bn. Fruits and vegetable products, milk and milk products, beverages

(both alcoholic and non-alcoholic) poultry and meat products, marine and aqua products,

edible oil and grain and cereal products are the key segments within the processing

industry.

84

Chapter 14

Norms, procedures

and formalities for

imports of spices in

Uganda

85

Norms & Policies of Uganda

In terms of exports and imports, few countries in Africa provide the sort of strategic

location that Uganda offers to the investors. The country is located at the heart of East

and Central Africa, a region that includes some of Africa's most economically important

countries.

The Ministry of Tourism, Trade and Industry (MTTI) is responsible for trade policy

formulation and implementation in Uganda. Other Ministries, particularly Finance and

Agriculture, however, are also involved both in formulation and implementation of trade

policy. The Presidential Economic Policy Forum, together with other public institutions,

carries out periodic reviews and assessments of trade-related policies within the

Government. Sessional committees of the Parliament also review policies, including trade

policies; there are opportunities for periodic inputs from the private sector.

Uganda is a member of the Common Market for Eastern and Southern African States

(COMESA), a reign with a market of over 300 million people and bringing together 20

countries. As a trading bloc, COMESA imports more than US$17 billion and exports

over US$13 billion worth of goods each year.

Investors in COMESA countries like Uganda enjoy preferential treatment for their intra-

COMESA exports by way of reduced tariffs.

Uganda has also signed bilateral trade and investment promotion agreements to promote

export and import with the United Kingdom, Italy, Kenya, Tanzania, South Africa,

Egypt, India, China, Germany, the Netherlands and many other countries.

The Ugandan economy was characterized by erratic and inconsistent trade policies from

the 1970s to the late 1980s. The Economic Recovery Programme (ERP) launched in 1987

aimed to improve the competitiveness of Ugandan exports by eliminating controls in the

foreign exchange market. Trade policy reforms implemented in Uganda since 1987,

coupled with direct export promotion measures and other aspects of the ERP

The major trade policy reforms tend to have a more immediate effect on imports than on

exports, as Ugandan reforms directly affect import prices (by reducing restrictions or

tariffs). Export revenues are largely determined by world prices, which are beyond

86

Uganda‘s influence, while export performance is influenced by non-trade factors, such as

marketing and transport.

Year Reform

1987 Dual trade licensing system introduced,

Duty exemptions on raw materials and capital goods suspended.

1988 Some protective tariffs (sugar, soap) raised,

Open General License (OGL) scheme for imports implemented,

1989 Retention account scheme for export earnings introduced,

Duty exemption on raw materials

1990 Export licensing system replaced with certification system,

Foreign exchange bureau/parallel foreign exchange market

legalised,

1991 Import licensing replaced with certification system,

Duty drawback scheme introduced,

1992 Tariff structure rationalized (6 rates in 10-60% range),

Several duties on raw material abolished,

Tax on coffee exports abolished

1993 Unified inter-bank foreign exchange market /floating exchange rate

System of trade documentation reformed, pre-shipment

requirements introduced,

Cross border initiative (CBI) to promote regional trade introduced

1994 Further rationalization (10-50% range) of the tariff structure

Import duties on some of the materials suspended

Tax on coffee exports reintroduced

1995 Coffee tax reduced

Narrow range of products only on negative import list

Reduced exemptions from duties on raw materials and intermediate

inputs

1996 Coffee tax abolished

Further rationalization of tariffs, to three non-zero rates with

87

maximum of 30%

(though protective excise duty of 12% applies also on many tariff

lines)

1998 Tariff bands reduced to three – 0, 7 and 15 per cent (although with

some special excise duties) and almost all import bans removed.

Uganda qualifies for HIPC debt relief

2000 Fixed Duty Drawback Scheme and the Manufacturing Under Bond

Scheme introduced for exporters

Uganda has eliminated all quantitative restrictions; most of the remaining non-tariff

restrictions are maintained for moral, health, security or environmental reasons. Tariffs

have become Uganda's main trade policy instrument. Uganda has been applying the

customs valuation method based on the transaction value since July 2000.

In addition to tariffs, imports may be subject to an import license commission of 2%, a

4% withholding tax, as well as internal taxes, such as the excise duty of 10%, except on

cigarettes (130%), alcoholic beverages (70%) and soft drinks (15%), and a 17% value-

added tax (VAT), which apply equally to imports and domestic products. In 1999/2000,

52% of the revenue collected under VAT came from imported goods.

Uganda has substantially simplified the structure of its tariff. The simple average rate of

Uganda's applied MFN 2000/01 tariff is 9%. However the import license commission and

the withholding tax increase the average rate to 15%. There is some tariff escalation. In

addition, special protection is provided to the sugar and textiles industries.

Moreover, while Uganda has bound other duties and charges on imports at zero, an

import license commission and a withholding tax are imposed, which raises concern

about compliance with its tariff bindings. By eliminating the import license commission

and the withholding tax, by increasing the coverage of its binding commitments for both

goods and services, and by narrowing the gap between applied and bound rates, Uganda

would enhance the transparency and predictability of its trade regime. Such adjustments

88

could contribute to full exploitation by Uganda of its comparative advantages, and attract

investment.

Uganda encourages foreign investment. The Uganda Investment Authority (UIA) is

intended to be a "one-stop shop" to promote and facilitate investment in Uganda. A

commitment to continuing liberalization of the economy and macroeconomic stability are

important attributes of the atmosphere that Uganda hopes will attract foreign investors,

who may own 100% of investments in companies. Uganda offers various tax incentives,

including import-duty concessions and accelerated depreciation for plant and machinery,

and VAT deferral. Investment licensing requirements include a minimum capital of

US$100,000 for foreigners and US$50,000 for Ugandans

Uganda views foreign trade as an important stimulus to economic growth, and its trade

policies aim to contribute to poverty reduction, promotion of employment, and

diversification and promotion of exports, particularly of non-traditional products. These

policy objectives have been pursued through continuing liberalization, deregulation,

privatization, and participation in regional agreements, particularly the Common Market

for Eastern and Southern Africa (COMESA) and the East African Community (EAC).

Exports:

The total Uganda export volume for the year 2009 was $3.151 billion. The country rank

121 in terms of total export volume. According to the 2008 statistics, goods are primarily

exported to:

Sudan 14.3%

Kenya 9.50%

Switzerland 9.00%

Rwanda 7.90%

UAE 7.4%

Democratic Republic of the Congo 7.3%

UK 6.9%

89

Netherlands 4.7%

Germany 4.4%

The export commodities are:

Coffee

Fish &Fish Products

Tea

Cotton

Flowers

Horticultural Products

Gold

Imports:

The total Ugandan import volume for the year 2009 was $4.106 billion. The country

ranks 118 in terms of total import volumes. According to the 2008 data, Uganda‘s import

partners are:

UAE 11.4%

Kenya 11.3%

India 10.4%

China 8.1%

South Africa 6.7%

Japan 5.9%

The Imported Goods include:

Capital Equipment

Vehicles

Petroleum

Medical Supplies

Cereals

90

Procedural Requirements (PVoC Program):

To export to Uganda there is need to comply with requirements set by Uganda National

Bureau of Standards (UNBS), that is any goods imported into Uganda shall be

accompanied by Pre- export Verification Certificate (PVoC ) program. This program has

been set on 9th June 2010.

To improve the quality, standard & Safety of products, to ease clearance procedures, to

promote the fair competition & fight against counterfeiting of goods, this PVoC program

is set by UNBS.

Every consignment of imported goods, which contain regulated products, shall be

accompanied by a Certificate of Conformity (CoC) issued by the PVoC Country

Offices (offices operated and managed by authorized PVoC Contractors) prior to

shipment.

The PVoC Certificate is required to ensure smooth Customs clearance of

shipments in Uganda.

The PVoC certificate confirms that the products comply with relevant Ugandan

technical regulations and/or approved standards.

Regulated product shipments can be exported through three routes depending

upon the type of exporter and frequency of shipments

The PVoC incorporates elements of conformity assessment; consignment

inspection based on product risk assessment and product registration schemes to

provide exporters and importers with maximum flexibility in demonstrating

compliance with the approved technical regulations.

The Programme applies to all the countries except the East African Partner States

namely, Kenya, Tanzania, Rwanda and Burundi.

To obtain this verification certificated we need to follow a procedure which consists of 3

steps:

1) A request for verification with any agent of Export/ Import to/from Uganda.

2) Routes to compliance

3) Issue of PVoC certificate

91

1) A request for verification with any agent of Export/ Import to/from Uganda.

This request is consist of:

The list & designation of goods to be exported, name & address of the importer &

exporter.

Conformity documents provided by the exporter, i.e. third party certificate, test

reports or laboratory reports, reports of analysis according to safety or hygiene

standards.

Information related to the location & provisional date of availability of goods to

carry out the physical inspection of goods before shipment.

2) Routes to compliance

To create flexibility & reduce intervention according to risk, the PVoC program offers 3

different routes to demonstrate compliance:

Route A: It is applicable to any goods & any trader.

Under Route A, products to be shipped have to be both tested and physically inspected to

demonstrate conformity to relevant standards, essential requirements or manufacturer‘s

specification. This route is open to all products being exported by either traders or

manufacturers. This Route is open to any trade party.

The certification process through Route A is as outlined below:

a. Submission of Request for Certification (RFC) by the Exporter

b. Review of RFC/ Documentation submitted by Exporter to PVoC Contractor

c. Consignment Inspection by the Appointed Inspector

d. Consignment Testing

e. Issuance of the Final Certification Document (Certification Decision/CoC) by the

PVoC Contractor

Route B: It is for frequent traders of homogeneous goods.

92

Route B offers a fast track certification process for goods with reasonable and consistent

levels of quality through Registration of such products by the PVoC Contractor. Product

Registration is recommended to exporters having frequent shipments of homogenous

products. The process of Registration and certification is as follows:

Product Registration

Submission of Registration Application to PVoC Contractor by the Exporter

Review of Registration Application submitted by Exporter to PVoC Contractor

Registered Product Consignment Certification Process

Submission of Request for Certification (RFC)

Consignment Inspection by the Appointed Inspector

Random Consignment Testing

Issuance of the Final Certification Document (Certification Decision/ CoC) by the

PVoC Contractor

Route C: It is for manufacturer who had their goods licensed for Uganda.

This route is open only to manufacturers who can demonstrate existence of a quality

management system in their production/ manufacturing process. It involves auditing of

such production processes and licensing of products manufactured thereof by authorized

PVoC Contractor. This route is recommended for manufactures that have high

frequency/volumes of shipments.

The Licensing process includes:

Product Licensing

Submission of Licensing Application to PVoC Contractor by the Exporter

Review of Licensing Application submitted by Exporter to PVoC Contractor

93

Type testing of product

Periodic factory surveillance in line with ISO Guide 28

Licensed Product Consignment Certification Process

Random consignment inspection by the Appointed Inspector

No consignment testing

Issuance of the Certificate of Conformity (CoC) by the PVoC Contractor

Route A

Yes

Route B

No

Route C

GOODS

REGISTERED

GOODS

LICENSED

GOODS

Inspection

Testing/ Test

report

Review of

Registration

Risk

Assessment

Based on the

Risk

assessment:

Documentary

Review

Inspection

Testing

Random Inspection

Satisfactory?

Certificate

Non

Conformity

report

Certificate

94

Chapter 15

Business

Opportunities for

future in Uganda:

95

PRODUCTION OF DEHYDRATED SPICES IN INDIA:

Only 3-5% of total produce is dehydrated in India. Whereas other countries like Malaysia

dehydrates 80% and UK dehydrates 68% of the total produce of fruits and vegetables.

In India 1, 70,000 tons of raw onions are produced, out of that only 4-5% is being

dehydrated. And so India has great stock availability but out of the total produce, after the

consumption of fresh onion annually, the remaining stock gets spoiled or rotten and due

to this our country is not able to make the optimization of the produce.

But in Indian houses, housewives are not comfortable to use these dehydrated spices,

because they think fresh spices and vegetables cannot be replaced by anything else. It is

not common in Indian homes.

In India the following states have the major production in Chilli, Ginger and Turmeric,

coriander, cumin, fennel, fenugreek, ajwain seed, dill seed, mustard seed, poppy seed

and garlic.

In Andhra Pradesh during 2002-03 there was production of 722.79(in tons), in Rajasthan

during 2002-03 there was production of 520.99(in tons) and in Gujarat there was

production of 366.81(in tons) during 2002-03. The following is details about the

dehydrated spice in Gujarat.

DEHYDRATED SPICES IN GUJARAT:

In Gujarat, Mahuva has more than 75 industries. Otherwise there are many small

manufacturing and exporting units of dehydrated spices located in various parts of

Gujarat.

Mainly dehydrated spice industries are located in Mahuva apart from that, this industries

can be seen in Bhavnagar, Jamnagar, Rajkot, Ahemdabad, Surat, Vadodara etc in many

districts of Gujarat.

In Gujarat, due to high production of mangoes, here the dehydration of mangoes takes

place n mango powder and Amchur powder are produced as a result.

Here is the some glimpse about the dehydrated spice industries in Jamnagar.

96

DEHYDRATED SPICES IN JAMNAGAR:

The dehydration of spices was started in Jamnagar around 1972. Here in Jamnagar, the

dehydrated spices & vegetables are manufactured and exported. Some of the vegetables

like onions, potatoes, etc are first imported from other regions and then dehydrated.

The main export products are Dehydrated Onion (red & white) and Dehydrated Garlic in

various forms like flakes, minced, powder, etc. other Dehydrated Vegetables like potato,

ginger, spinach, coriander, carrot, cabbage, green chili, etc…

MARKETING CONSTRAINTS

1. Lack Of Marketing Information: Due to lack of market information regarding

prices, arrivals etc., prevailing in other markets, producers sell spices to the

merchants.

2. Inadequate Cold Storages & Other Facilities: Due to inadequate cold storage

facilities exporters are forced to sell their produce at lower rate.

3. Financial Problem: Lack of market finance is one of the major marketing

constraints in operating of marketing chain.

4. Infrastructure Facilities: Due to inadequate marketing infra-structural facilities

with producers, traders and at market level, the marketing efficiency is affected

adversely.

97

CRITICAL FACTORS:

Following are the various critical factors which should be taken care of:

1) Availability of land.

2) Fondness of people for spices.

3) Niche Market.

4) Developing country.

5) New market to capture.

6) Labor-intensive industry.

7) Major constraints.

8) Requires special packaging.

1) Availability of land:-

The government support is more important. Land availability is very cheap in Uganda

therefore it is a big opportunities to capture Ugandan market in future. There is a wide

scope in Uganda to have an export of dehydrated spices and in future it may possible that

to set up any office over there.

2) Fondness of People for spices:-

The Ugandan people are fond of Indian spices. As the country is growing the people‘s

purchasing power also rises. The people are fond of different food items and therefore

dehydrate spice can help them to have instant spice in their house to make any food

items. Almost every food item needs to have spice in it. Therefore dehydrate spice can be

useful for people in Uganda for every king of food whether it is vegetarian or non-

vegetarian. Therefore to export dehydrated spice would be profitable there.

3) Niche Market:-

India is mostly known by its spices and other food item. Therefore Indian industrialist

mostly has huge opportunities capture many other countries. Spices of India are

mostly liked by other countries. Ugandan people are also fond of many food items

therefore to export spices in Uganda is beneficial. However the country is developing

the low income people might not purchase those dehydrated spices. Therefore the

98

high income people or creamy class people in Uganda can be capture. This is the one

of the opportunity for exporter.

4) Developing Country:-

Uganda is developing country therefore there would be not many difficulties to

capture the market of Uganda. The people of Uganda are also fond of different dishes

as Indian people. Uganda is also dependent on agriculture as most of the people are

dependent on agriculture. Therefore dehydrated spices can help them to have

readymade spices available in their houses.

5) New market to capture:-

There are not many industries available in Uganda regarding dehydrated spices.

Therefore it is the opportunities for the Indian industries to capture that market where

there are many customers are available. However the governments policies should be

helpful or should allow the Indian dehydrate spice to export in Uganda.

6) Labor – Intensive industry.

Dehydration being a labor intensive industry so, Laborers need to be persuaded. It

also poses a question that whether they are reliable or not because there is high

domestic insecurity.

7) Major constraints

There are many constraints like:

No proper infrastructure facilities.

No adequate storage facilities.

No proper food habits are cultivated there.

There is also risk of theft, poverty.

If these constraints are overcome, then this industry may grow up.

99

8) Requires special packaging.

o It has to be taken care that there is no air and water permeability.

o Polythene packaging is avoided due to water permeability.

o It is primarily packed in HD/LD (high density/ low density) bags and then put

into over sacked bags.

If some major exporters come together and remove the trade barriers and develop a

market of dehydrated spices. The large scale companies of India can do merger or can

take over the company and can do export of dehydrated spices.

Proper infrastructure facilities would also help in developing it. If the Government or any

private companies can help the companies of the India to have some glimpse about the

infrastructure facilities then the development of dehydrated spices industries can be

emerged in Jamnagar or any part of Gujarat or India and it can help to export the

dehydrated spices in Uganda.

Government policies also affect the development of dehydrated spices. The role of

Government of Uganda is crucial to allow the Indian company to export the dehydrated

spice, because then it will be conducive for the Indian companies to do export there. The

Indian government‘s help could be taken to convince the government of Uganda.

Therefore both the government should be convinced.

This industry would take some time in growing up. It is good opportunity for Indian

dehydrated spices industry. The price of land in Uganda is much lower than the price of

land in India. The taxes are also low in Uganda and it is beneficial to set-up the office

over there in future. Availability of labor force is also there and it is very cheap in

Uganda also.

By considering above factors, we can say that by the support of the Indian government

and Uganda government there is wide scope for exporters of Jamnagar to export the

dehydrated spice in Uganda in years to come.

100

Conclusion

101

It is difficult to give a final conclusion to such an exploratory and open report. However,

we can conclude by saying that India has been a very well known and major exporter as

far as spices are concerned. During the medieval ages also, India was the sole major

supplier of spices across the world and is continuing with the same tradition.

Dehydrated spices are in demand by a lot of countries and even those who themselves are

very good in agricultural sector. This industry is also developing at a rapid growth rate in

Gujarat too and a country like Uganda where the dehydrated spices are in demand, it

could be a great opportunity for the spices exporters of Gujarat.

Uganda as a country is a little closed and unchecked by most of the Indian business

houses and also the industry which we have selected is also not the most favourite

industry for exports in Gujarat so we can conclude by saying that, new medium and small

sized entrepreneurs can really look in to this as a lucrative business.