June 2, 2025
PHUENTSHOLING – A farmer from Mongar recently sold 2,082 kilograms (kg) of cardamom for Nu 1,585 per kg, netting over Nu 3.29 million. But had market conditions been fair, he could have earned nearly Nu 864,000 more.
The potential loss in revenue is at the center of growing frustration among Bhutanese cardamom exporters and farmers, who say illicit imports, fronting practices, and weak enforcement are pushing prices down and eroding the reputation of one of Bhutan’s most prized exports.
Cardamom prices recently hovered between Nu 1,550 and Nu 1,850 per kg, with market watchers predicting a peak of Nu 2,000. But traders say those hopes are dashed each season by a flood of low-quality imported cardamom, much of it from India and Nepal, masquerading as Bhutanese-grown produce.
While this is not a new practice, some exporters admit that it exists within certain circles of the trade. However, they clarify that not all exporters are involved.
The practice of mixing imported cardamom with genuine Bhutanese produce has distorted the market, lowering the overall quality and undermining buyer trust. This has not only affected prices but has also reduced demand, as consumers become wary of product authenticity.
Such practices also pose a long-term risk to the sustainability and reputation of Bhutanese cardamom in the global market.
Rampant fronting
Kuensel investigation found that fronting is now a common practice in cardamom trade in Samtse and Phuentsholing, where many Indian traders operate under Bhutanese export licenses.
Bhutanese license holders act as legal covers, allowing foreign traders to bypass enforcement and tax systems. Some Bhutanese exporters are working with Indian traders for this purpose.
According to sources, several storage facilities are active in different parts of Phuentsholing where such activities occur. These facilities are registered under Bhutanese exporters but are operated by Indian traders.
These facilities operate at odd hours, including late nights and weekends, to avoid attention from authorities. One such facility in Phuentsholing was spotted loading cardamom on a Sunday, between 2:42 pm and 6:12 pm, at a time when officials would not be on duty.
During one transfer, a Bhutanese man stood outside with a group of Indian workers, while the Indian trader was reportedly in another facility in Damdhara, an area with low activity. Pick-up vehicles arrived one after another to collect the packages
When some Bhutanese exporters reached the location and raised concerns, Kuensel was told that such trade practices had already become the norm in the market.
Many report that Indian traders are involved in both the buying and export of cardamom from Bhutan. Further, they often pay advance to local farmers to secure the supply.
Illegal cardamom import
Despite border control and checks, cardamom import and unfair market practices have begun to affect the market in Bhutan.
Indian traders reportedly bring cardamom from India and Nepal to mix with Bhutanese stock, raising concerns about trade integrity and market effects.
Cardamom in Nepal and India sells at lower prices due to its quality and difficulties in exporting through formal channels caused by India’s goods and services tax. This situation has pushed some traders to reroute the product through Bhutan, where exporting is easier.
While formal entry through Jaigaon remains difficult due to enforcement, Samtse faces similar checks. However, local exporters say the Jiti border is used as a passage point. Cardamom is often concealed in grocery shipments to avoid inspections.
A trader from Tashicholing said border security exists on both sides, but Bhutanese checks are active only on specific days (Friday and Sunday), allowing cross-border movement on other days. Traders also use an informal route near one of the outposts for illegal transport.
A source near the India-Nepal border said an Indian trader recently loaded 12 metric tonnes of cardamom, likely heading to Bhutan. The shipment moves in small batches to avoid detection. The price paid was INR 1,350 per kg, while the Bhutanese rate was Nu 1,700, creating a profit margin.
The source said the trader later expressed frustration after local exporters found out about the operation, suspecting border traders of informing Bhutanese authorities.
Packaging is one way traders identify the origin of cardamom. Bhutanese cardamom usually comes in yellow sacks used for animal feed, while imports come in white sacks with different stitches.
Once the product crosses into Bhutan via Jiti, it becomes easier to move to Phuentsholing.
Exporters say the check post at Amochhu bridge carries out inspections only sometimes.
Although authorities deny this route, traders in the region say it is common knowledge and the practice has been going on for a long time.
Local traders suffer
The growing concern among local exporters goes beyond illegal trading. It raises deeper questions about tax compliance and fairness in the overall business environment.
While Bhutanese exporters are required to follow regulations and pay taxes even for small-scale operations, outsiders involved in the cardamom trade operate without any such obligations yet earn large profits.
This unequal playing field, they argue, undermines the purpose of the country’s regulatory and tax system. “We pay taxes for our business and when outsiders operate without taxes with higher profit margin, it is unthinkable and the government should address this for the sake of its citizens,” said an exporter in Samtse.
In addition, exporters allege that certain Indian nationals, who enter Bhutan legally with permits issued by the Food Corporation of Bhutan (FCBL) to buy agricultural commodities, are involved in fronting through informal collaboration with Bhutanese individuals.
The FCBL confirmed that 15 registered buyers operate in the region, who engage in various agricultural commodities, including arecanuts, oranges, ginger, and cardamom.
According to the FCBL, two of these buyers have established direct purchasing relationships with farmers and Bhutanese exporters in their individual capacity, which the FCBL said is exercising their right to negotiate better prices.
“It is essential to understand that FCBL lacks the authority to compel either Indian buyers or Bhutanese farmers to process their cardamom transactions exclusively through the FCBL auction yard,” said an FCBL official.
FCBL supports trade by offering infrastructure like go-down rentals and auction platforms, but Indian nationals involved in these transactions must hold valid permits. “Indian buyers cannot export any agricultural products from Bhutan independently without a valid export license, which necessitates collaboration with Bhutanese exporters who hold the appropriate licenses.”
The FCBL official further said that the claims of unauthorised trade are unfounded, since all exports, including cardamom, follow proper procedures and regulations.
The FCBL stated that stringent procedures monitored by relevant agencies are in place for exports, requiring a valid license, export declaration, certificates of origin, BAFDA certification, and a dispatch invoice, among other documents.
Authorities in the dark
The Ministry of Finance (MoF) acknowledged the potential implications such practices may have on local exporters, market fairness, and national revenue. However, it stated that it had no direct knowledge of illegal trade activities or allegations.
In its written response to Kuensel, the finance ministry cited the Trade and Industry Rules 2023, which require prior written approval from the ministry before a Bhutanese person can engage in business collaboration with a foreign national.
“An operation in which foreign exporters unofficially operate under Bhutanese licenses or collaborate informally without following regulatory procedures is illegal,” the ministry stated.
While the issue does not fall directly under its jurisdiction, the MoF said it will inform the Ministry of Industry, Commerce and Employment, and the two ministries will work together to assess the situation and take necessary steps to resolve it.
The finance ministry has already directed the relevant agencies to investigate and bring the matter to a logical conclusion.