Acknowledgement

Acknowledging the special efforts of my guide Prof Mrs. Vidya Telang I feel proud on my fortune that has given me chance to work under an enthusiastic, energetic and continuously encouraging person. He has guided me all along the project and I never felt alone in my project. His direction, systematic way of working, clear thoughts, and above all friendly nature never made it felt that it was a teacher-student relationship rather than Guide-student relationship.

Lastly I would like to pay my gratitude towards my parents because of whom I am in this world, with a certain objective, in my life. Although they were physically not present but without there blessing it was just impossible to complete this project.

History of Spices India is known as The home of spices. No Indian meal is considered complete without the tangy and delectable flavor of Indian spices, locally known as masala. Indian spices famous the over world for their gastronic value are known to possess high medicinal values. There is no other country in the world that produces as many kinds of spices as India. Some of the most widely consumed spices in the country inter alia include: chilli (Lal Mirach), cinnamon, cumin (Jeera), curry leaf (Curry Patta), fennel (Saunf), asafoetida (hing/heeng), basil (Pudina), Bay Leaves (Tej Patta), cardamom small (Chotti Elaichi), cardamomlarge (Badi Elaichi), ginger (Adrak), mustard, bishops weed (Ajwain), cassia (dal chini), celery (Kala Jeera), clove, coriander (Dhania), fenugreek (Methi), garlic (Lahson), kokam, mint, onion, parsley, pomegranate, turmeric (Haldi), tamarind (Imli) pepper (Kali Mirach), poppy (Post Dana/Khaskhas) rosemary and vanilla. The climate of the country is found suitable for growing almost all spices.

Varieties of spices
Spices:The country today produces a wide range of spices. These can broadly be divided into five categories viz.

Fenugreek Chilly

Fennel Mustard Cardamoms Turmeric

Coriander Ajwain Ginger Black Pepper

Cloves

Nutmeg

Cinnamon

Tejpatta

Tamarind

Basil

Rosemary

Savory

Garlic

Saffron

Pepper Long

India is one of the largest producer, consumer and exporter of spices. India is reported to grow over 50 spices in different parts of the country. The Spices Board, under the umbrella of Ministry of Commerce and Industry, Government of India is the apex body for promoting exports of Indian spices. Established in 1987, the Board has been playing an important role as a developmental, regulatory and promotional agency for Indian spices. Its broad-based activities include formulation and implementation of quality improvement systems, research and development programs, imparting of education and training to farmers, processors, packers and exporters on post harvest handling, etc. On the promotion of spices, the Spices Board is regularly participating in international food fairs, assisting exporters for trade fair participation, sending business delegations to identified markets for export development.

Chapter I Conceptual Framework Rationale 3

Objective Methodology Limitation Literature Review

Conceptual Framework This study focuses on the scenario of Indian spices and its strengths. Also, it focuses on the US market which is the largest importer of spices in the world. Emphasis has been given on US rules and regulations which are important barrier for Indian spices export. Research rationale: India has a rich history of spices. Market share of 45% by quantity and 30% by value. Varieties of spices produced in India are unmatchable, which provides it with the natural advantage and competitive edge, combining both positives it can become a market leader in US market. Research objective: To analyse the export of Indian spice to US. To study US market & analyse US rules and regulations. To suggest the strategies for promoting the export of spices from India to US.

Research hypothesis: Indian would be able to export spices with respect to its production and would become leader in export to USA. Research methodology: While doing this project secondary sources such as internet, magazine, books were used. Limitations: Lack of primary data. Suggestions can be biased as they are based on personal view.

Literature Review Speaking recently about the export prospects of spices, Mr. Thomas Philip, Chairman, All India Spices Exporters Forum said that India may soon emerge as the worlds leading producer of processed spices doubling annual export earnings to US$1 billion within the next five years. For achieving this, he said that a conducive industry environment and stable policy framework is necessary for such growth. Indian spices, he further added, have changed from the decade ago scenario with value added or processed goods contributing bulk of revenue instead of primary raw materials. The change has taken place during the last one decade. In 1990, 83% of Indias pepper export was in primary form. Today however only 25% of pepper exports are in primary raw material form while the rest goes in processed form. The exports of spices thus offer tremendous export potential. For achieving this, there is need to push up production through advanced technologies such as tissue culture and biotechnology, gearing up private entrepreneurs to start processing industries for extraction of essential oils, development of storage and warehousing, transport and market infrastructure in the country, close coordination among various organizations related with exports of spices and creating greater awareness about the benefits of using byproducts of spices viz. spices oils, oleoresins, and natural colors. Besides, special efforts need to be made to push up consumption of aromatic spices in the overseas markets

Chapter II Indian scenario a) b) Introduction Background of Indian spice Types Uses Production Production in India Major producing states

Spice

The American Spice Trade Association (ASTA) defines a spice as "any dried plant produce used primarily for seasoning purposes." This definition includes tropical aromatics (such as pepper, cinnamon, and cloves); leafy herbs of the temperate zone (notably oregano, basil, and sage); spice seeds (sesame, mustard, and caraway); and dehydrated vegetables (such as onion, garlic, and chile peppers). History Trade in spices is a very old business. As early ass 350 BC sailors from the Malaysian peninsula rode the monsoon to China to exchange goods. The fifteenth century route was a combination of many nations. At the far eastern end the Chinese collected cloves and nutmegs from the East Indies and delivered the to the Malaysian port of Malacca. Muslim merchants from India, Malay or Arabia, transported the goods across the bay or Bengal to India. In India, the cinnamon of Ceylon, and pepper from India was added to the cargo and sold in the spice ports of Calicut, Cochin, Cannore, Goa and Gujarat along the western coast of India.

Introduction India produces a wide range of spices. At present, India produces around 3.2 million tonnes of different spices valued at approximately 4 billion US $, and holds a prominent position in world spice production. Because of the varying climates - from tropical to sub-tropical to temperate-almost all spices can be grown in this country. All states and union territories of India, at least one spice is grown in abundance. Around 75 spices out of the 109 spices listed in the ISO list are given here. Types of spices Some of them are Asafetida Pepper Fenugreek Bay leaf Cinnamon Curry leaf Cardamom Clove Fennel Cumin Cinnamon Garlic Ginger Chilli Mint

Multi utility Spices 1 Medicinal Pepper is used in certain tonic and rubefacient preparations. As flavor ingredient in most major food products including non alcoholic

beverages, candies, baked foods, meat and meat products, Cheese, condiments and relishes. The Oil goes into perfumes and flavoring. Piperine is also an effective insecticide against houseflies and is also used for Black pepper is occasionally employed as ant periodic in obstinate fever either

spraying against different types of pests in garden. alone or with other drugs preferably quinine.

2. CosmeticsFor Dandruff : Fenugreek seeds made into a paste could be applied over the scalp. Application on the head helps the growth of hair and prevents hair fall. Fenugreek seed flour is used as a poultice to inflamed parts and is applied on the Fenugreek extracts are used in certain perfume bases as well as in soaps,

skin as a cosmetic. detergents, creams and lotions with maximum use level of 0.2% reported in perfumes Production Because of the varying climates suitable for the spice cultivation. Almost all spices are grown in this country. In almost all of the 25 states and seven union territories of India, at least one spice is grown in abundance. No country in the world produces as many kinds of spices as India.

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Some of the states are: State wise Area and Production of Spices in India Area: 000 hectares, Production: 000 Tonnes

State

Major spices grown

Andaman & Nicobar Andhra Pradesh Arynachal Pradesh Assam Bihar Chhattisgarh Gujarat Himachal Pradesh Jammu & Kashmir Karnataka Kerala Maharashtra Meghalaya Manipur Mizoram Madhya Pradesh Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttaranchal West Bengal

Pepper, chilly, ginger, clove, nutmeg, cinnamon Chilly, Ginger, turmeric, coriander, mustard seed. Garlic and tamarind Chilly, Ginger and turmeric Chilly and turmeric Chilly, ginger, turmeric, coriander, mustard seed and garlic Chilly, ginger, turmeric, mustard seed and garlic Chilly, ginger, turmeric, coriander, cumin, fennel, fenugreek, ajwain seed, dill seed, mustard seed and garlic Chilly, ginger, turmeric, coriander and garlic Chilly, ginger, turmeric, garlic and saffron Pepper, cardamom (small), chilly, ginger, turmeric, coriander, mustard seed, garlic, tamarind, clove, nutmeg, cinnamon and sweet flag Pepper, cardamom (small), chilli, ginger, turmeric, garlic, tamarind, clove, nutmeg and cinnamon Chilly, ginger, turmeric and garlic Chilly, ginger, turmeric, mustard seed and tejpatta Chilly, ginger, turmeric and mustard seed Chilly, ginger, turmeric and garlic Chilly, ginger, turmeric, coriander, mustard seed and garlic Chilly,, ginger, turmeric and garlic Chilly, ginger, turmeric, coriander, mustard seed and garlic Chilly, celery and garlic Chilly, ginger, turmeric, coriander, cumin, fennel, fenugreek, ajwain, dill seed, mustard seed,garlic Cardamom (large), ginger and turmeric Pepper, cardamom (small), chilly, ginger, turmeric, coriander, mustard seed, garlic, tamarind and clove. Chilly, ginger and turmeric Chilly, ginger, turmeric, coriander, fennel, fenugreek and garlic Chilly, ginger, turmeric, coriander, fenugreek and garlic Cardamom (large), chilly, ginger and turmeric

Chapter III Indian performance 11

Exports Major markets Major producing countries

The Indian share At present, India produces around 2.5 million tonnes of different spices valued at approximately 3 billion US $, and holds the premier position in the world With a production base of 27 lakh tonnes covering 50 different types of spices, India exports 8-10 per cent of its output to 150 different countries. Source SFEA

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An estimated 500,000 tonnes of spices and herbs valued at 1500 million US dollars are now imported globally every year. An impressive 46% of this supply comes from India. India's exports of spice extracts have shown spectacular growth attaining over 50 percent of the global market within a short span. The Indian export of spices has crossed the 450 million US dollar mark during 20072008 and has reached 468 million US dollar. This remarkable achievement is born of a sea change in the industry scenario. From traditional commodity exports, Indian Spices have evolved into a state-of-the-art industry. Absorbing technology, broad basing its products range, developing value added products, identifying niche markets, forging strategic alliances clinching global collaborations and joint ventures.

Spice exports Destinations : The major destination of Indian spice exports USA followed by Malaysia, UK, China, Germany, Japan, UAE, Sri Lanka, and Singapore Export data Export Share of spices in Principal Commodities Groups exported from India: 13

Table no: 1 Year 2008 2007 2006 2005 2004 2003 Percentage .52% .48% .55% .53% .69% .77% source: [Link] Interpretation: During recent years exports have shown an increasing trend because of growth of exports of value added spices, oils and oleoresins.

Indian Spice Exports India exports around 0.30 million tons of spices annually and account for around 45% of the export volume and 30% of the export value. Spices exports have registered substantial growth during the last one decade. It has increased from 373750 tonnes valued MLN US $ 792.95 in 2006-2007 to 444250 tonnes valued MLN US $ 1101.80 in 2007-08, registering an all time record in terms of quantity and value.

Indias share in world trade of spices (2007 - 2008)

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(QUANTITY) Source: Spice Board

(VALUE)

Major spices exported The major items exported from India (2009-10) are Mint products, Chilli, Spice Oils & Oleoresins, Pepper and Turmeric. India meets around 70% of the world demand for spice oils & oleoresins.

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Interpretation: This shows the decrease in the import of spices in which is due to the healthy production of spices due to favorable

16

Source : Spice Board

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Export of spices to USA Table no:7 Year Values in Rs. Lakhs Source: [Link] Analysis: Exports have increased from 2005 to 2009 and then decreased, attributed to following reason. Decrease in the domestic production. Introduction of rules and regulation in the developed countries. SWOT Analysis
Strength India is the largest producer of different varieties of spices. On an average every state produces at least one spice. It holds 45% of market share by quantity. It exports to 150 different countries. Low productivity and high cost of production. The string of safety problems as mad cow, foot and mouth, GMOs. Significant technology to do high valueaddition is lacking Opportunity Vanilla is currently in short supply in the global market with low production from Madagascar. Hence in export of vanilla India has the chance of grabbing the opportunity. If the spice processors followed the HACCP procedures, Indias export to developed countries will show a rise. Threat Big importers are looking to import from the suppliers giving timely delivery, which leads to conclusion that others exporters would be eliminated. Vietnam has become the biggest competitor for the Indian spice farmer and is now producing all the spices traditionally grown in India. Farmers increase the area under a certain crop if global prices go up but do not know how to deal with a situation when prices fall. Dependency on Indian monsoon Weakness lack of raw material competitiveness,

2005-06 58231.83

2006-07 77390.3

2007-08 86717

2008-09 2009-10(E) 112441.5 87265.3

Inability to meet quality requirements of the importing countries. lack of value-addition.

India meets around 70% of the world demand for spice oils & oleoresins.

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Chapter IV Government policy/incentives Advance authorization scheme/license Government policy

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Government policy/incentives Advance authorization scheme/license Government policy Duty exemption/remission scheme Contribution of international/Indian Organization

An Advance Authorization is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage). Fuel, oil, energy, catalysts etc. which are consumed/utilized in the course of their use to obtain the export product. Duty free import of mandatory spares up to 10% of the CIF value of the Authorization which are required to be exported/ supplied with the resultant product may also be allowed under Advance Authorization. Value Addition In case of spices (covered by Chapter 9 of the ITC(HS) Classification of Export & Import Items, 2004-09), the minimum value addition under advance Authorization shall be 15%. Duty entitlement pass book scheme (DEPB) The objective of DEPB is to neutralize the incidence of Customs duty on the import content of the export product. The neutralization shall be provided by way of grant of duty credit against the export product. Duty free import authorization (DFIA) A Duty Free Import Authorization is issued to allow duty free import of inputs which are used in the manufacture of the export product (making normal allowance for wastage).Fuel, energy, catalyst etc. which are consumed or utilized in the course of their use to obtain the export product. Duty free import of mandatory spares up to 10% of the CIF value of the Authorization which are required to be exported/ supplied with the resultant product may also be allowed under Authorization.

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Market Access Initiatives (MAI) Market Access Initiatives (MAI) Scheme is an Export Promotion Scheme envisaged to act as a catalyst to promote Indias export on a sustained basis. The scheme is formulated on focus product-focus country approach to evolve specific market and specific product through market studies/survey. Assistance would be provided to Export Promotion Organizations/ Trade Promotion Organizations/ National Level Institutions/ Research Institutions/ Universities/ Laboratories, Exporters, etc., for enhancement of export through accessing new markets or through increasing the share in the existing markets. Under the Scheme the level of assistance for each eligible activity has been fixed. Marketing development assistance scheme Export promotion continues to be a major thrust area for the Government. In view of the prevailing macro economic situation with emphasis on exports and to facilitate various measures being undertaken to stimulate and diversify the countrys export trade, Marketing Development Assistance (MDA) Scheme is under operation through the Department of Commerce to support the promotional Activities.

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Focus market scheme Objective The objective is to offset the high freight cost and other disabilities to select international markets with a view to enhance our export competitiveness to these countries. Exports of all products to the notified countries shall be entitled for duty credit scrip equivalent to 2.5% of the FOB value of exports for each licensing year commencing from 1st April, 2008. Vishesh Krishi and Gram Udyog Yogna The objective of Vishesh Krishi and Gram Udyog Yojana (Erstwhile Vishesh Krishi Upaj Yojana) is to promote export of Fruits, Vegetables, Flowers, Minor Forest produce, Dairy, Poultry and their value added products, and Gram Udyog products by incentivising exporters of such products. Entitlement Exports of Fruits, Vegetables, Flowers, Minor Forest Produce, Dairy, Poultry and their value added products shall be entitled for duty credit scrip equivalent to 5% of the FOB value of exports. Towns of Export Excellence A number of towns in specific geographical locations have emerged as dynamic industrial clusters contributing handsomely to Indias exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets. Selected towns producing goods of Rs. 1000 crore or more However for the Towns of Export Excellence in the Handloom, Handicraft, Agriculture and Fisheries sector, the threshold limit would be Rs 250 crores.

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Brand Promotion and Quality The Central Government aims to encourage manufacturers and exporters to attain internationally accepted standards of quality for their products. The Central Government will extend support and assistance to Trade and Industry to launch a nationwide programmed on quality awareness and to promote the concept of total quality management. Test Houses The Central Government will assist in the modernization and up gradation of test houses and laboratories in order to bring them at par with international standards. Quality Complaints/ Disputes The Regional Sub-Committee on Quality Complaints (RSCQC) set up at the Regional Offices of the Directorate General of Foreign Trade shall investigate quality complaints received from foreign buyers. The guidelines for settlement of quality complaints, in particular, and such other complaints, in general, are given in Appendix-16 of Handbook of Procedures (Vol. I ). Status recognition Category One Star Export House Two Star Export House Three Star Export House Four Star Export House Five Star Export House Privilege A Star Export House shall be eligible for the following facilities: i) Authorization/License/certificate/permissions and Customs clearances for both imports and exports on self-declaration basis; ii) Fixation of Input-Output norms on priority within 60 days; iii) Exemption from compulsory negotiation of documents through banks. iv) 100% retention of foreign exchange in EEFC account; Performance (Rupees in Crores) 15 100 500 1500 5000

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Assistance from organizations All India spice export forum (AISEF) AISEF is an organization providing a platform for interaction between our members, the regulatory agencies, government, trading partners, suppliers of raw material, equipment, services and the users of our members products mainly the spice and the food industry worldwide. Activities

Information about buyers looking for products. Status update of adjudications and arbitrations cases for and against our Statutory & regulatory developments. Status update on projects that the forum pursues on behalf of the industry. News, views & opinions of our members that you want to share.

members.

India Pepper And Spice Trade Association (IPSTA) The India Pepper And Spice Trade Association (IPSTA) is an Association of members registered under Section 25 of the Company's Act situated in Mattancherry, Kochi established in 1957. IPSTA has been functioning in futures trading in pepper without break since 1957. Futures trading is a price risk management instrument which offers many advantages to traders, stockiest, farmers, exporters and end users by protecting them from adverse price fluctuations. Spice and Foodstuff Exporters Association of India Spice and Foodstuff Exporters Association commonly referred to as SFEA, was found out of the pressing need to bring a about new front for Exporters dealing in a variety of agricultural produce and agri-related products, in the absence of a suitable forum to promote their common cause. To tackle local issues like cess related problems with the local State and Central Government etc., quickly expanded in a vacuum guided by the dictating needs of this diverse, though still very integrated agri-based trade .

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Indian institute of spice research (IISR) Serves as a centre for excellence for conducting and coordinating research on all aspects of spices conservation, production, protection and post harvest technology. The Consultancy Processing Cell at IISR offers the following facilities in the area of Spices Research and Development.

Indian Institute of Packaging Government and industry joined hands to create the Indian Institute of Packaging in 1966 with the specific objective of improving packaging standards. The Indian Institute of Packaging is a national enterprise set up in May 1966 by the Indian Packaging and allied industry and the Government of India, Ministry of Commerce. The Institute's endeavor is to improve the standards of packaging needed for the promotion of exports and help create infrastructural facilities for overall packaging improvement in India through Research and Development, problem solving consultancy and testing, training and education, industrial co-ordination, information dissemination and other promotional efforts. Spice board Awards for excellence in spice exports Trophies and Awards for excellence in spices exports were instituted by the Spices Board to recognize and honor those exporters who achieve excellence in exports in the specified categories each year. Spices Board congratulates the winners for their splendid performance. Spice House Certificate The latest in the Board's campaign for quality up gradation is the introduction of the Spice House Certificate. The certificate is issued to those processors/exporters who have a genuine commitment to quality, and whose long-term objective is sustained export growth. The Spice House Certificate seeks to identify and recognize processors who have made investments in in-house processing facilities and infrastructure, and have the necessary competence to ensure consistent quality and reliability.

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Exim bank Marketing Finance Exim Bank seeks to create and enhance export capabilities and international competitiveness of Indian companies. Under the lending program for Export Marketing Finance, the Banks addresses the term finance requirement for a structured and strategic export marketing and development effort of companies.

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Chapter V USA Introduction/country profile USA market Potential in US market Import of USA Share of India

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USA Introduction Population: GDP (purchasing power parity): Composition by sector: 298,444,215 (July 2008 est.) $12.98 trillion (2008 est.) Agriculture: 9% Industry: 20.4% Services: 78.6% Export commodities: agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0% (2003) Import commodities: agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (Computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys) (2003) Import Partners: Canada 16.9%, China 15%, Mexico 10%, Japan 8.2%, Germany 5% (2009)

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USA Market United States is the world's largest spice importer and consumer, with both imports and consumption on an uptrend for the past 10 years. While the United States imports more than 40 separate spices, seven of these (vanilla beans, black and white pepper, capsicums, sesame seed, cinnamon, mustard, and oregano) account for more than 75 percent of the total annual value of spice imports. While the United States imports spices from more than 50 countries, 5 of these countries (Indonesia, Mexico, India, Canada, and China) regularly account for one-half of the annual value of spice imports. Production in US The United States produces nearly 40 percent of its annual spice needs, with imports supplying the remainder. Growing domestic production consists of capsicum peppers, mustard seed, dehydrated onion and garlic, and herbs. U.S. spice exports have also been expanding in recent years, led by dehydrated garlic and onion. US spice market is large, complex and rapidly changing. The US food industry introduces 10,000 products every New Year. Export Canada, Japan, and Germany are the principal markets for U.S. exports of spices, seasonings, and condiments. Exports consist of U.S. processed and packaged imported items and include domestically produced items such as dehydrated onions and garlic, capsicum peppers, ginger, sesame, and mustard.

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US Potential of Spices General Market Trends Spice consumption continues to grow at a healthy rate. In the United States, it has increased on a per capita basis (amount consumed per 1000 population) as well. This means that there has been a healthy compounded growth rate in the overall consumption of spices. According to the American Spice Trade Association (ASTA), per capita consumption has increased from approximately 1,000 kilos in 1980 to over 1,600 kilos now, an increase of 60 percent. Over the last twenty years, consumption of some spices has increased far more dramatically than others. The top 10 spices imported are as follows: Dehydrated Onion & Garlic Mustard Seed Red Peppers (except Paprika) Sesame Seed Black Pepper, Paprika Cinnamon, Cumin Seed, White Pepper and Oregano

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Import

source :USDA

31

Import of spices in 2008 ITEM Quantity CIF(VALUE) US$ 000 102,977 15,663 154,114 49,759 17,173 4698 9,682 2,113 37,660 500,885

MT Pepper (whole) 59,400 Pepper ground 7,494 Capsicum 89,780 Vanilla 1,506 Cinnamon 15,170 Cloves 1,312 Nutmeg 1,806 Cardamom 597 Ginger 32,027 Total 259,589 Source: Spice India (spice board magazine)

US spice import shares by major source of supply 2007-08

Source:USDA

Major Importing Companies

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source: supper market news At the helm of the spice segment is McCormick & Company, Inc., founded in 1889 andaccording to company literaturethe largest spice company in the world. Its product line, sold in the United States on the East Coast under the McCormick label and on the West Coast under the Schilling label, from 18 areas around the world. McCormick/Schilling had a 45 percent share in the U.S. retail spice market at the turn of the twenty-first century. features a wide variety of spices

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Indonesia accounts for largest share of spice imports. U.S. imports of specified spices and herbs in 2008 totaled $369 million. New York was the principal port of entry for these items, accounting for slightly over half of the total. Indonesia, Mexico, Madagascar, and India were the major sources of these imports. The United States depends on imports for two-thirds of its seasoning requirements. Reason Increased demand for ethnic foods has contributed to rising usage of spices. And the trend towards less salt in foods has stimulated more condiment use to compensate for flavour loss. Consumer Of Spice In USA Food manufacturers and institutions now account for nearly two-thirds of U.S. Spice usage, up from 40 percent a decade earlier, reflecting increased. The United States is the world's largest pepper importer, accounting for over one quarter of the total. Indonesia was the principal supplier of black pepper to the U.S. market in 1992, accounting for slightly over half of the total. Indonesia is the world's largest producer of white pepper, and accounted for nearly all of U.S. imports of Thai spice last year. New trend The trend toward natural flavoring in food products continues to keep demand for vanilla beans steady, despite strong competition from synthetic flavorings, such as vanillin. Vanilla is the most popular flavor in the United States, and accounts for nearly one-third of all ice cream sales. Ice cream is the largest use for natural vanilla, accounting for nearly half of the market. Imported spice are sorted, cleaned and graded and are considered as domestic items then are exported to other destinations .to Canada Japan, Germany.

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Indias share in import Spice oleoresins : Indian is leading supplier of spice oleoresins. Oleoresins are not

only produced in industrialized countries, but well established and modern plants exist in many developing nations, such as India, Singapore, Ethiopia, Indonesia, and Sri Lanka. India's exports of black pepper oleoresin in 1991 was a record 355 tons, compared with 194 tons a year earlier and 270 tons in 1989. Cloves: The U.S. is not a major clove consumer. Imports in 1992 amounted to only 1,156 tons, valued at $1.5 million, compared with year-earlier imports of 1,140 tons valued at $1.4 million. New York spot prices for Madagascar/Zanzibar cloves for 1992 averaged only 68 cents per pound, down from $1.04 in 1991 and $1.39 in 1990. Prices during the first quarter of 1993 have weakened further to an average of only 54 cents. Cardamom: India and Guatemala are the major producers, although Indonesia and Thailand have become significant exporters in recent years. Guatemala is by far the largest exporter, as most of India's crop goes for domestic consumption. The United States is a minor importer of cardamom. U.S. imports in 1992 totaled only 169 tons, with most of the shipments coming from Guatemala. Turmeric: A large Indian crop, coupled with the rupee devaluation, has pushed turmeric prices to sharply lower levels. Indian Alleppey (5.00 curcumin) New York spot prices in March averaged only 62 cents per pound, down sharply from a year earlier prices of $1.40 per pound. Turmeric is widely used as a food coloring agent, particularly in mustard products. Most U.S. imports are from India, which accounted for over three-quarters of the 1992 shipments of 2,606 tons.

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Vanilla Beans: Import in USA in 2008 Madagascars: Indonesia: France: Uganda: India: Capsicum/ Pimenta : Import in 2008 Import from Mexico: 26% Peru: India: China: Spain: Pepper (whole form): Import in 2008 Import from Vietnam : 34% 19% 18% 18% 4%. 75% 7% 6% 6% 3%

Indonesia : 30% Brazil: India: 24% 7%

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Pepper (ground form) India : 42%

Germany: 25% Brazil: 14%

Indonesia: 8% Curry and mixtures of spices Import from Thailand: India: Pakistan: 47% 25% 14%

Mixture of spices: India: Pakistan: Canada: 39% 23% 13%

Indias presence in US market India has the strong supply base in US market .pepper chilli, Vanilla , Turmeric , curry powder, and spice oils and oil oleoresins, are some of the items where India is strong. In US market, India performs extremely well in the years when the supply from other countries is not sufficient. Example: in 1999, India exported 25929 tonnes of pepper, India is having the maximum share in case of spice oils and oleoresins, 90%.

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Chapter VI

Government rules and regulation Packaging and labeling norms US entry procedure

38

Packaging and labeling Agency responsible: FDA FDA is the federal agency responsible for ensuring that foods are safe, wholesome and sanitary; human and veterinary drugs, biological products, and medical devices are safe and effective; cosmetics are safe; and electronic products that emit radiation are safe. FDA also ensures that these products are honestly, accurately and informatively represented to the public. Some of the agency's specific responsibilities include: Biologics Cosmetics Drugs Foods Medical Devices Radiation-Emitting Electronic Products Veterinary Products

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Fair packaging and labeling act Title 15 Commerce and Trade Chapter 39 - Fair Packaging and Labeling Program

Unfair and Deceptive Packaging and Labeling: Scope of Prohibition. (a) Nonconforming labels It shall be unlawful for any person engaged in the packaging or labeling of any consumer commodity which is contained in a package, which does not conform to the provisions of this chapter and of regulations promulgated under the authority of this chapter. 1453. Requirements of Labeling; Placement, Form, and Contents of Statement of Quantity; Supplemental Statement of Quantity. (a) Contents of label No person subject to the prohibition contained in section 1452 of this title shall distribute or cause to be distributed in commerce any packaged consumer commodity unless in conformity with regulations which shall be established by the promulgating authority pursuant to section 1455 of this title which shall provide that (1) The commodity shall bear a label specifying the identity of the commodity and the name and place of business of the manufacturer, packer, or distributor; (2) The net quantity of contents (in terms of weight or mass, measure, or numerical count) shall be separately and accurately stated in a uniform location upon the principal display panel of that label, using the most appropriate units of both the customary inch/pound system of measure, as provided in paragraph (3) of this subsection, and, except as provided in paragraph (3) (A)(ii) or paragraph (6) of this subsection, the SI metric system; (3) The separate label statement of net quantity of contents appearing upon or affixed to any package

40

(A) (i) if on a package labeled in terms of weight, shall be expressed in pounds, with any remainder in terms of ounces or common or decimal fractions of the pound; or in the case of liquid measure, in the largest whole unit (quarts, quarts and pints, or pints, as appropriate) with any remainder in terms of fluid ounces or common or decimal fractions of the pint or quart; (ii) if on a random package, may be expressed in terms of pounds and decimal fractions of the pound carried out to not more than three decimal places and is not required to, but may, include a statement in terms of the SI metric system carried out to not more than three decimal places; (B) shall appear in conspicuous and easily legible type in distinct contrast (by topography, layout, color, embossing, or molding) with other matter on the package; (C) shall contain letters or numerals in a type size which shall be (i) established in relationship to the area of the principal display panel of the package, and (ii) uniform for all packages of substantially the same size; and (D)shall be so placed that the lines of printed matter included in that statement are generally parallel to the base on which the package rests as it is designed to be displayed; and

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1454. Rules and Regulations. (a) Promulgating authority The authority to promulgate regulations under this chapter is vested in (A) the Secretary of Health and Human Services (referred to hereinafter as the ''Secretary'') with respect to any consumer commodity which is a food, drug, device, or cosmetic, as each such term is defined by section 321 of title 21; and (B) the Federal Trade Commission (referred to hereinafter as the ''Commission'') with respect to any other consumer commodity. (b) Exemption of commodities from regulations If the promulgating authority specified in this section finds that, because of the nature, form, or quantity of a particular consumer commodity, or for other good and sufficient reasons, full compliance with all the requirements otherwise applicable under section 1453 of this title is impracticable or is not necessary for the adequate protection of consumers, the Secretary or the Commission (whichever the case may be) shall promulgate regulations exempting such commodity from those requirements to the extent and under such conditions as the promulgating authority determines to be consistent with section 1451 of this title. (c) Scope of additional regulations Whenever the promulgating authority determines that regulations containing prohibitions or requirements other than those prescribed by section 1453 of this title are necessary to prevent the deception of consumers or to facilitate value comparisons as to any consumer commodity, such authority shall promulgate with respect to that commodity regulation. effective to (1)establish and define standards for characterization of the size of a package enclosing any consumer commodity, which may be used to supplement the label statement of net quantity of contents of packages containing such commodity, but this paragraph shall not be construed as authorizing any limitation on the size, shape, weight or mass, dimensions, or number of packages which may be used to enclose any commodity;

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(2)regulate the placement upon any package containing any commodity, or upon any label affixed to such commodity, of any printed matter stating or representing by implication that such commodity is offered for retail sale at a price lower than the ordinary and customary retail sale price or that a retail sale price advantage is accorded to purchasers thereof by reason of the size of that package or the quantity of its contents; (3)require that the label on each package of a consumer commodity (other than one which is a food within the meaning of section 321(f) of title 21) bear (A) the common or usual name of such consumer commodity, if any, and (B) in case such consumer commodity consists of two or more ingredients, the common or usual name of each such ingredient listed in order of decreasing predominance, but nothing in this paragraph shall be deemed to require that any trade secret be divulged. (4)prevent the nonfunctional-slack-fill of packages containing consumer commodities. For purposes of paragraph (4) of this subsection, a package shall be deemed to be filled to substantially less than its capacity for nonfunctionally slack-filled if it is

reasons other than (A) protection of the contents of such package or (B) the requirements of machines used for enclosing the contents in such package. (d) Development by manufacturers, packers, and distributors of voluntary product standards Whenever the Secretary of Commerce determines that there is undue proliferation of the weights or masses, measures, or quantities in which any consumer commodity or reasonably comparable consumer commodities are being distributed in packages for sale at retail and such undue proliferation impairs the reasonable ability of consumers to make value comparisons with respect to such consumer commodity or commodities, he shall request manufacturers, packers, and distributors of the commodity or commodities to participate in the development of a voluntary product standard for such commodity or commodities under the procedures for the development of voluntary products standards established by the Secretary pursuant to section 272 of this title. Such procedures shall provide adequate manufacturer, packer, distributor, and consumer representation. (e) Report and recommendations to Congress upon industry failure to or abide by voluntary develop

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Product Standards If (1) after one year after the date on which the Secretary of Commerce first makes the request of manufacturers, packers, and distributors to participate in the development of a voluntary product standard as provided in subsection (d) of this section, he determines that such a standard will not be published pursuant to the provisions of such subsection (d), or (2) if such a standard is published and the Secretary of Commerce determines that it has not been observed, he shall promptly report such determination to the Congress with a statement of the efforts that have been made under the voluntary standards program and his recommendation as to whether Congress should enact legislation providing regulatory authority to deal with the situation in question. 1456. Enforcement. (a) Misbranded consumer commodities Any consumer commodity which is a food, drug, device, or cosmetic, as each such term is defined by section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321), and which is introduced or delivered for introduction into commerce in violation of any of the provisions of this chapter, or the regulations issued pursuant to this chapter, shall be deemed to be misbranded within the meaning of chapter III of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331 et seq.), but the provisions of section 303 of that Act (21 U.S.C. 333) shall have no application to any violation of section 1452 of this title. (b) Unfair or deceptive acts or practices in commerce Any violation of any of the provisions of this chapter, or the regulations issued pursuant to this chapter, with respect to any consumer commodity which is not a food, drug, device, or cosmetic, shall constitute an unfair or deceptive act or practice in commerce in violation of section 45(a)of this title and shall be subject to enforcement under section 45(b) of this title.

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(c) Imports In the case of any imports into the United States of any consumer commodity covered by this chapter, the provisions of sections 1453 and 1454 of this title shall be enforced by the Secretary of the Treasury pursuant to section 801(a) and (b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 381).

1457. Annual Reports to Congress: Submission Dates. Each officer or agency required or authorized by this chapter to promulgate regulations for the packaging or labeling of any consumer commodity, shall transmit to the Congress each year a report containing a full and complete description of the activities of that officer or agency for the administration and enforcement of this chapter during the preceding fiscal year. All agencies except the Department of Health and Human Services and the Federal Trade Commission shall submit their reports in January of each year. The Department of Health and Human Services shall include this report in its annual report to Congress on activities under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), and the Federal Trade Commission shall include this report in the Commission's annual report to Congress. 1458. Cooperation with State Authorities; Transmittal of Regulations to States; Noninterference with Existing Programs. (a) A copy of each regulation promulgated under this chapter shall be transmitted promptly to the Secretary of Commerce, who shall (1) transmit copies thereof to all appropriate State officers and agencies, and (2) furnish to such State officers and agencies information and assistance to promote to the greatest practicable extent uniformity in State and Federal regulation of the labeling of consumer commodities. (b) Nothing contained in this section shall be construed to impair or otherwise interfere with any program carried into effect by the Secretary of Health and Human Services under other provisions of law in cooperation with State governments or agencies, instrumentalities, or political subdivisions thereof.

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FDA Import Procedures 1. Importer files entry notice with Customs 2. FDA, notified by Customs of the entry, makes a decision as to admissibility. a. The product is allowed to proceed into U.S. commerce, after applicable duties are paid OR b. FDA decides to examine an entry 3. After examination 1 2 3 4 a. If the product is in compliance, it is released by Customs and allowed into U.S. commerce. OR b. If it appears volatile, FDA issues a Notice of Detention and Hearing to the owner or consignee

4. If the product is refused, the importer is required to either re-export or destroy the article

To ensure that FDA is notified of all regulated products imported into the United States, the importer, or his/her representative, must file an entry notice and an entry bond with the U.S. Customs Service (Customs). Specific information on U.S. Customs procedures, requirements, forms, etc., are available from local Customs offices. When FDA is notified by Customs of the entry, a decision is made as to the article's admissibility. If FDA does not wish to examine the entry, the product is allowed to proceed into United States commerce. Generally, if FDA decides to examine an entry, an FDA representative will collect a sample from the shipment for laboratory evaluation. If the analysis indicates the product is in compliance with U.S. requirements, the shipment may be released into United States commerce. If there is a violation, the product will be refused admission.

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Detention without Physical Examination (DWPE) A product may be detained as soon as it is offered for entry into the United States based on past history and/or other information indicating the product may be volatile

In some instances a product may be detained as soon as it is offered for entry into the United States. This procedure is the administrative act of detaining a product without physical examination and is based on past history and/or other information indicating the product may be volatile. A product may be subject to a detention without physical examination (DWPE) recommendation until the shipper or importer proves that the product meets FDA guidelines or standards. Occasionally, FDA identifies products from an entire country or geographic region for DWPE when the volatile conditions appear to be geographically widespread. Detention recommendations of this breadth are rare and are initiated only after other avenues for resolving the problem have been exhausted. It must be emphasized that DWPE matters must be settled well before shipment of fresh produce. All perishable produce must adhere strictly to all import requirements. Delays of questionable items easily result in spoilage, even if the item is subsequently cleared for commerce.

Pesticide Residues on Raw Agricultural Commodities Tolerances for pesticide residues on many raw agricultural commodities have been established under Section 408 of the Federal Food, Drug, and Cosmetic Act (FDA, 2001). The term "raw agricultural commodity" means any food in its raw or natural state, including all unprocessed fruits, vegetables, nuts, and grains. Foods that have been washed, colored, waxed, or otherwise treated in their unpeeled natural form are considered to be unprocessed. Products of this kind containing pesticide residues are in violation of the Federal Food, Drug, and Cosmetic Act unless: (1) the pesticide chemical has been exempted from the requirement of a residue tolerance; or (2) a tolerance has been established for the particular pesticide on the specific food and the residue does not exceed the tolerance (Sec. 408). The Environmental Protection Agency establishes, revokes or changes tolerances, as the facts warrant such action. Firms considering offering foods for entry into the United States that may contain pesticide residues should determine if there are

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tolerances for the pesticides on the product in question. This determination can be made by contacting the EPA (see Additional Resources for contact information).

Chapter VII

Export strategy Distribution Method of promotion

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Distribution Direct Exporting Sales Representatives The representative uses the company's product literature and samples to present the product to potential buyers. A representative usually handles many complementary lines that do not conflict. The sales representative usually works on a commission basis, assumes no risk or responsibility, and is under contract for a definite period of time (renewable by mutual agreement). Distributors The foreign distributor is a merchant who purchases goods from exporter (often at a substantial discount) and resells it for a profit. The foreign distributor generally provides support and service for the product, thus relieving the company of these responsibilities. The distributor usually carries an inventory of products and a sufficient supply of spare parts and also maintains adequate facilities and personnel for normal servicing operations Foreign Retailers A company may also sell directly to foreign retailers, although in such transactions, products are generally limited to consumer lines. The growth of major retail chains in markets such as Canada and Japan has created new.

Direct Sales to End Users A business may sell its products or services directly to end users in foreign countries. These buyers can be foreign governments; institutions such as hospitals, banks, and schools; or businesses. Buyers can be identified at trade shows, through international publications, or through Commerce's Export Contact List Service.

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Indirect Exporting Confirming Houses Export Management Companies Export Trading Companies Export Agents, Merchants, or Remarketers Piggyback Marketing

Methods of promotion By taking part in activities organized by Spice Board, ITPO, FIEO. Participating in fairs and exhibitions in India and abroad, Buyer-Seller Meets, Contact Promotion Programmes, Product Promotion Programmes, Promotion through Overseas Department Stores, Gathering Market Surveys and Information Dissemination.

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Findings Developing countries derive a substantial portion of their income from food

and agricultural trade. The emergence of food safety and agricultural health issues and the related

tightening of market requirements are making the exports challenging Developing countries are the dominant source of supply for the worlds US$2

billion trade in bulk (whole) spices and value-added spice ingredients and products. World trade in spices shows volatility, stemming from the structure of the

trade, climatic conditions, and the rapidity with which producers can respond to price changes. trade. India is unique among the worlds major spice exporting countries in that the About three million Indian smallholder households produce spices and

hundreds of thousands of others are involved in spice processing, distribution and

bulk of its spice production is used in the domestic market. years. Estimated domestic retail value of spices in India is some $4 billion. While the values of Indian spice exports has been $300-400 million in recent

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Market share of leading spice exporters Table no: 11 Countries 2007 China 11.7 Madagascar 4.1 Indonesia 21.8 India 18.9 Guatemala 3.8 Brazil 7.4 Vietnam 5.3 Sri Lanka 5.0 [Link] 2008 15.0 14.0 13.3 12.8 6.6 6.5 6.3 5.1

For cinnamon, vanilla, and ginger, the three leading countries account for 85

percent, 80 percent, and 76 percent, respectively, of total world exports. Somewhat lower yet still significant levels of concentration exist in the trade of cloves, pepper, and capsicum, where the 3 countries shares are 62 percent, 57 percent, and 46 percent, respectively. India is the leading world supplier of ground/crushed pepper, turmeric, spice mixtures, and spice oils/oleoresins. India is claimed to account for more than two-thirds of world trade in the latter value-added products. India is also a major player in the world markets for chilies and spice seeds.

Factors effecting exports

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Distinctive requirements of end-users. Higher quality/safety standards for value-added products. High concentration in the retail sale of branded products. Tariff escalation.

Bottlenecks

Infrastructural problems like uneven roads cause undue delay for delivery. Delay in getting the incentives. Delay in getting documents from company. Price fluctuation in domestic market. Hurdles in getting finance. Cost of documentation Lack of facilities at ports. Application of Export cess. Availability of low quality cheaper goods in International markets. Tougher norms in developed countries.

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Chapter IX Recommendations Conclusion

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Recommendations market. Export of crushed and value added products should be encouraged. Government should focus on infrastructural problems. Documents should be reduced. Procedure of response from the government organization should be

accelerated. Norms for getting finance should be liberalized. Facilities at port should be increased so as to reduce the congestion.

Government should try to reduce the levy on exports such as export cess, which will make the goods more competitive in the international

Conclusion

India is having diversified products under the category spices, this is the basic strength which forms a strong basis for India to be the global producer in coffee exports. Even though EU is the major coffee importer and India is the major coffee producer in the world, Indias share in EU market is not very significant. The stiff price competition from the countries like Brazil Uganda and Peru for coffee. However, the positive side is that for value added coffee like Arabica and Robusta, India has the dominant presence in the market. India with the strong processing base will be able to tap this market share at a higher rate over the years.

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References

Webliography

[Link] [Link]/plants/cardamom_landing.html [Link]/[Link] [Link]/[Link] [Link]/wps/portal/!ut/p/_s.7_0_A/7_0_1OB? navtype=SU&navid=LAWS_REGS [Link]/apeda/ffv_rawat.htm [Link]/[Link] [Link] [Link]/econ/census02 [Link]/epahome/[Link] [Link] [Link]/xp/cgov/import

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