Tariff Trouble
For companies that run on wafer-thin margins – with raw materials forming nearly 75% of their costs – the 50% US duty could be a deal-breaker.
“Even if you say it’s the US consumer who will bear the burden, your competitive advantage is gone,” warns Geemon Korah, CEO of Mane Kancor. “If we sell at $10 today, with tariffs it becomes $15. The consumer will buy the same product from another source at $12. Customers have already asked us to hold back shipments until there is clarity.”
India has built itself into the world’s processing hub for spices, thanks to Kochi’s expertise, ecosystem and manpower. But with tariffs tilting the playing field, other producing nations may leapfrog. “If raw materials are anyway coming from Vietnam or Indonesia, why wouldn’t companies simply set up factories there?” asks Korah.
That is exactly what the Kerala majors are now considering – moving parts of their operations abroad. “We cannot put all our eggs in one basket,” Korah says. “This has been a wake-up call. We have to look beyond India.”
Losing Ground at Home
Even without tariffs, Kerala has been losing its edge. Pepper, once branded black gold, is now cultivated more in Karnataka than in Kerala, where rising labour costs have crippled production. Vietnam, producing five times more pepper than India, has become the world’s supplier.
“Indian pepper is flavourful, but Vietnam sells at $2,000 a tonne cheaper,” says veteran exporter Kishor Shamji. “Domestic demand is over 100,000 tonnes, but India produces only 75,000 tonnes. The gap is filled with imports – some even from Sri Lanka and Myanmar.”