Kochi, Kerala: Kerala—once celebrated globally as the land of pepper, nutmeg, and cardamom—is now confronting an uncertain future. Beginning 27 August, a 50% U.S. duty has been imposed on Indian spice exports, threatening to disrupt the operations of four major value-added spice extractors based in the region.
A historic legacy meets modern crisis
Kochi, home to leading spice processors, transformed raw spices into high-value oleoresins and natural extracts, serving global food, beverage, nutraceutical, and fragrance industries. These companies, including names like Synthite Industries and Mane Kancor, play a pivotal role in the global spice value chain. Yet their reliance on imported raw materials—often constituting up to 75% of production costs—makes them particularly vulnerable to steep tariff increases.
Gravity of the tariff impact
With margins already thin, the newly enforced 50% tariff could render spice exports to the U.S. financially unviable. Exporters fear this blow may erode competitive pricing, shrink orders, and diminish their global footprint, especially when other producers face lower duties.
Raw sourcing patterns
Interestingly, Kerala’s spice industry does not rely solely on local farms. Much of the raw material is sourced from countries like Vietnam, Indonesia, Sri Lanka, and Guatemala—processed in advanced Kochi facilities, then re-exported. Still, the tariff threatens the entire value chain, from procurement to export.
Broader economic fallout
The tariff shock isn’t limited to spice processing. Kerala’s export economy also includes seafood, textiles, cashew, coir, and even medical equipment. Earlier, a 25% tariff had already triggered warnings from the state’s Finance Minister about potential job losses and reduced income for farmers and labourers.
Conclusion
As Kerala grapples with its lowered trade competitiveness, these tariffs pose a critical challenge to the future of spice processing and export. Unless policymakers step in with mitigation measures and explore alternative markets, Kerala’s historic spice legacy risks being overshadowed by economic strain.