Dehydrated Spices Industry of India and Positioning It in Uganda”

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

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.

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.

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 30 of the sector between India and Gujarat

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 62 to 5 years

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 84 Uganda 16 Business opportunities for future in Uganda 94 19 Conclusion 100

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.

Chapter 1 Demographic and Geographical Details

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

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 66.8% 76.8% 57.7% read and write

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

Chapter 2 Overview of economy And Political condition

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.

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.

Chapter 3 Contribution of different sectors towards economy

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

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.

Chapter 4 Domestic and international trade

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.

 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 17 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. 18

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.

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

Chapter 5 Taxation Policies

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

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.

Chapter 6 Present trade with India

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.

Chapter 7 Opportunities for entrepreneurs of Gujarat in Uganda

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 Moderate High Agro based products 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

Global Country Report

Uganda- Part II

Dehydrated Spices Industry

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.

Chapter 8 Introduction to spice industry of India:

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 31

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

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

2 Source: Spices board of India Source: www.indianspices.com 32

GRAND TOTAL 2649075 4664210 2850045 5063082 2940388 5278851 GRAND TOTAL IN MLN TONNES 4.66 5.06 5.28

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.

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 2004 – 05 2005 - 06 2006 - 07 Area Prodn Area Prodn Area Prodn State/Spice (Hec.) (Tons) (Hec.) (Tons) (Hec.) (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.

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 TARGET FOR APRIL 2011 TO JANUARY SPICES 2011-2012 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

35 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

Chapter 9 Overview of current business functions and exports of spices from India

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

• 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.

• 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.

4 Source: http://focusafrica.gov.in/Trade_overview_3-5years_Uganda.html4

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

42 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.

• 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.

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

45 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 46

• 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

Chapter 10 Potential for import and export

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.

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

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

Last six years prices of different spices:

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

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.

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.

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

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.

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

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

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 .

 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

Duty drawback : 0904 Pepper of the genus 1% 1% Piper; dried or crushed or ground fruits of the genus Capsicum or of the genus Pimenta 0905 Vanilla 1% 1% 0906 Cinnamon and 1% 1% Cinnamon-tree flowers 0907 Cloves (whole fruit, 1% 1% cloves and stems) 0908 Nutmeg, mace and 1% 1% cardamoms 0909 Seed of anise, 1% 1% badian, fennel, coriander, cumin or caraway; juniper berries

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.

Chapter 11 Present Position and Trend of business with India during

last 3 to 5 years

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

Year 2006-07 2007-08 2008-09 2009-10 2010-11 Quantity ( 334.85 463.3 474.7 536.45 533.2 M.t)

Product wise export of spices to Uganda Product(qty. 2006-07 2007-08 2008-09 2009-10 2010-11 M.T) 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 & 4.35 2.35 4.05 4.8 8.5 mace 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.

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.

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.

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.

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.

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.

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.

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

Chapter 12

Present trade barriers for export to Uganda

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.

• 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.

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

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.

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.

Chapter 13 Norms, procedures and formalities for exporting spices from India

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.

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.

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.

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.

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.

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.

Chapter 14 Norms, procedures and formalities for imports of spices in Uganda

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

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

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

87 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%

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

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

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.

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

 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 Inspection

GOODS Satisfactory? Testing/ Test repor t Yes Based on the Route B Review of Risk Certificate REGISTERED Registration assessment: GOODS Documentary Certificate Risk Review Assessment Inspection No Testing

Route C Non LICENSED Random Inspection Conformity GOODS report

Chapter 15 Business Opportunities for

future in Uganda:

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.

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.

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

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.

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.

Conclusion

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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.

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