Economics of Red Chillies in India

India is the leading producer of chilli contributing close to 43 per cent of world¿s production followed by China and Peru. Besides India, the other major producers and exporters are China, Pakistan, Morocco, Mexico and Turkey. India is also the largest exporter of chilli in the world. Indian chillies are mostly exported to Sri Lanka, USA, Nepal, Mexico, Malaysia, and Bangladesh. The trade competitiveness of Indian chilli was assessed using nominal protection coefficients (NPCs), which varied from 0.46 to 0.69 during the period from 2006-07 to 2010-11 indicated that Indian red chilli is globally price competitive. The results of the Granger causality indicating that the international chilli prices in New York market influenced the prices at Guntur and Khammam markets but not vice versa. New York chiili market prices in turn were influenced by the prices of Virudhunagar and Nagpur markets. Chilli prices in all the domestic markets in the country exhibited persistent fluctuations over a period of time and it was maximum in Nagpur market.