We Indians just cannot help but savour the flavour of delicacies spiced up with a sprinkle of garam masala. Be it the bhoondi raita, masala chai or the delicious biryani, a mere pinch of garam masala is enough to give you that distinct taste. But do you think all the ingredients in it are Indian? If your answer is yes, think twice. For, The Dollar Business will break the myth

Vanita Peter D’souza | The Dollar Business

 

Had your meal? So, what did you eat? Kadhai Panner, Murg Masala or Mutton Biryani? And as usual, you must have dumped the entire spice mix – such as cinnamon sticks, tejpata, black pepper and cloves. We all do it. But what if we tell you the cloves, which you just savoured, were imported? Believe it or not, it was!

Essence of life

India is the second largest importer of clove in the world. According to the Ministry of Commerce, India’s imports clocked around $98 million in FY2013. The demand for clove in India has always exceeded supply. According to Indian Spice Board estimates, during FY2013, India produced 1,060 MT of clove, while imports were to the tune of 10,900 MT. Tamil Nadu is the largest producer of clove in India, followed by Karnataka, Kerala and Andaman & Nicobar. The spice is harvested in the month of January, February and December.

From foreign fields

Apart from retail buyers like you and the millions of other Indians, companies like Everest Spices, Mahashian Di Hatti Ltd. (MDH), DS Spiceco Pvt. Ltd. (Catch), and Desai Brother’s Ltd. (Mother’s recipe) are some among the bulk buyers of clove in India. Speaking about this, Bhai Pardhan Singh & Sons’ Managing Director, Raj Kunwar Singh told The Dollar Business, “Indian clove production is very low, whereas the demand for it is huge. So, whatever is produced in South,  it is consumed there itself. Hence, to fulfill the domestic demand, we have to import.” Apart from cooking, clove is also known for its medicinal values, with refrigerant, digestive and antibacterial properties. The spice also contains anti-oxidants like Eugenol and Gallates. Hence, clove has a high demand in both the toothpaste and the pharmaceutical industry.

Golden Islands

Though Indonesian clove is of superior quality, it is usually consumed in local cigarette factories. Moreover, importing from Indonesia can turn out to be expensive proposition. Indonesian clove attracts 30% import duty. Despite this, during the first six months of the current fiscal, India has sourced clove worth $1.94 million from Indonesia. Interestingly, Indonesia has banned cloves imports into the country. However, Shailesh Shah, Director, Jabs International told The Dollar Business, “Though Indonesia banned clove imports, the government there issues licences to cigarette companies to import clove, whenever the requirement or demand rises.”

Justifying Indonesian government’s stand, Raj Kunwar said, “Cigarette manufacturing companies are the major buyers of clove in Indonesia. The ban is imposed with a view to promote their own cigarette industry and also to allow the usage of its own produce of clove. Madagascar, Tanzania (Zanzibar), and Comoros are India’s major clove exporters. These nations are categorised as least developed countries (LDCs) because of which Indian importers could enjoy 90% discount on import duty till last year. But with a rise in imports from these nations in 2014, the Government of India abolished it. “However, India has a pact with African countries and the clove exported from Madagascar, Zanzibar and Comoros is still cheaper than from elsewhere,” Raj Kunwar added.

Interestingly, in an interaction with The Dollar Business, Raj Kunwar made special mention of Sri Lankan clove. He said that India was importing a lot of it from Sri Lanka but its quality was not up to the mark and hence clove trading between the two countries has declined over a period of time. However, Indians have started buying lands in one of the islands in Sri Lanka where cloves are grown. Validating this, Satveer Singh, Partner, GS Intertrade, told The Dollar Business, “They have either started cultivation on their own or have tied up with Sri Lankan companies which cultivate clove. This purchase of land and cultivation is only in its initial stage and this trend is yet to pick up” he said. Sri Lanka produces two different varieties of clove. One variety is much better than the Indonesian cloves and the other is lower than Indian cloves. Hence, the price difference between the two varieties is also nearly 50-60%.

 

Specialist’s job

The aroma of clove determines the quality of the spice. So, to understand the detailed specification of the perfect clove, The Dollar Business caught up with Hiren Patel, Partner, MM Agro International. Patel says it’s not just the aroma of the clove which he considers while importing. “The moisture content of the clove should ideally be around 6-8%, the stem percentage should be maximum 4% while the size of cloves should be around 7-10 mm,” Patel told The Dollar Business. The colour of the clove also plays an important role. Though reddish-brown clove is popular in India, clove from Sri Lanka, which is dark in colour, is also picking up really fast. In simpler words, “India imports CG3 grade clove,” avers Shah, a Mumbai based importer.

Nowhere to store

While most of us store our spices (whether grounded or whole) in airtight tins, importers cannot do the same. Singh said, “Clove needs to be stored in cold storages. It cannot be stored in normal warehouses. You need to maintain a temperature of around 10-12 degrees and in dry conditions. Damp environment can spoil the clove.” Monitoring of clove from time to time is really important factor. It can help protect the quality of clove. There will always be some weight loss because, over a period of time, the clove will release moisture. “For instance, you might have stored 50 kg cloves in a bag, but by the time you get it out, it will be 49 kg per bag,” Singh said. In fact, cloves have maximum of two years shelf life.

 

Spicy side

Mostly, clove is traded via forward markets, where rules are broken by African traders, Patel accused. “The moment local prices of clove shoot up, African traders stop supplying at the pre-determined prices. We have to once again start negotiating with them for stocks, which, ultimately, leads to losses,” he pointed out. Patel suggests the government should discuss the issue with its African counterparts and come up with a mutually benefiting solution. Market volatility is another issue for importers, which is usually caused by the currency fluctuations and local demand for clove.

 

Interestingly, Singapore, the largest importer of clove, is not even considered as an importing country by traders. While Shah labels Singaporeans as speculators, Raj Kunwar terms them as hoarders. “Singaporeans are very smart people. They procure from Madagascar, Indonesia, etc., and hoard them. In any case, Singapore is too small to consume such huge amount of clove,” said Raj Kunwar while Shah pointed out, “It is a rich country. They buy stocks and when the prices of clove are in their favour, they re-export it.”

 

 

But then Indians are also not behind when it come to hoarding. This makes determination of margin a difficult task for importers. “Just like Singaporeans, in India too people have the monetary capacity and they take positions during certain times. So, the margins cannot be determined. But, on an average, it is around 8-10%,” said Raj Kunwar.

 

For dreamers

The only expectation importers have from the new Modi government is that it should bring down duty on cloves imported from Indonesia. In fact, Singh, a Delhi based importer, is very happy with the government’s support to the clove trade. He says, “It is a very old trade. It is a nice trade, yet a dicey trade. We can’t help, we are dealing with commodity.” And if all this doesn’t entice you towards it, then this is what Shah of Jabs International has to say: “Wealthy people trade in clove.” Don’t you want to be one?