As the government recently imposed a flat Rs45 per kg import duty on betel nuts, opportunist traders have stopped importing the product and have shifted their focus to importing pepper.

The customs statistics from Kakarvitta and Birgunj show that the import of black and white pepper have increased exponentially, and that the spice currently ranks high in the list of imports that are made via Birgunj. Government officials, however, cannot ascertain the reason behind this sudden dramatic rise in the import of the spice.

According to Mechi Customs Office, the custom point in the eastern region, 96 tonnes of pepper, worth Rs42.24 million, was imported in the last fiscal year.

The customs charges an import duty of 5 percent and an additional 13 percent of VAT on pepper. The customs valuation of the spice is $7,000 per tonne for black peppers, and $9,000 per tonne for white peppers.

Overall, the customs duty for importing a tonne of pepper is Rs143, 000. The price of a kg of pepper in the Nepali market, with taxes, is Rs700. But in India, pepper costs Rs900 per kg. As the price of pepper is more in India, traders are seen to be importing the product from Nepal and then smuggling them to India through clandestine channels. Traders also take advantage of nominal customs duty, say sources. “There is a big profit margin in the pepper trade,” said a source who did not want to disclose his identity. “Thus, smuggling has thrived in major bordering points.”

For example, only two weeks ago, the police in Kakarvitta had seized 150kg of pepper in Kakarvitta. But sources said that normally goods are seized at the border only when traders and police argue on commission and create a commotion.  “But like how the smuggling of betel nuts and lentils came to an end, the illegal trade of peppers is also likely to be exposed soon,” the trader added.

The import of peppers from two customs points—Integrated Check Post (ICP) and Sirsiya Dry Port—in Birgunj accrued more than Rs5 billion in the last fiscal year, a seven-fold jump as compared to last fiscal year’s import report.

The spice is currently being imported from Vietnam, Brazil and Indonesia to Nepal.