An Indian spice trade group said on Friday that spice exports could drop by 40% after two major brands were hit with contamination allegations over the use of a pesticide the group considers safe but others say causes cancer in the event of long-term exposure.

India is the world's biggest exporter, consumer and producer of spices, and its spice exports came to $4 billion in the year from April 2022 to March 2023.

But the Federation of Indian Spice Stakeholders (FISS) said the industry has already seen buyers put some export orders on hold amid international scrutiny of two popular Indian brands - MDH and Everest.

The exports regulator, the Spices Board, did not respond to a request for comment.

Hong Kong last month suspended sales of three MDH spice blends and one from Everest citing high levels of the pesticide ethylene oxide, or ETO - a cancer risk in the event of long exposure.

The two companies both say their products, hugely popular in India and exported globally, are safe for consumption.

"If other countries also start taking a similar stand, our spices exports could fall by 40%," said Tejus Gandhi, the secretary of FISS, which represents 600 spice makers and exporters around the country.

Already, Britain's food regulator has applied extra checks for all spice imports from India and the U.S, New Zealand and Australia are looking into the matter.

"Many countries are questioning... Lot of spices exporters have orders. They have been halted," Gandhi said at a press briefing in Ahmedabad city in western India.

ETO can be used as a pesticide to help prevent microbial contamination. While some nations allow a small presence of ETO in spices, many completely prohibit it.

The U.S. Environmental Protection Agency says regular exposure to ETO over many years raises the risk of cancers including non-Hodgkin lymphoma, myeloma and lymphocytic leukemia, as well as breast cancer in women.

India's Spices Board last month said the country has "stringent protocols and guidelines for ETO residue" and it will strictly monitor consignments going abroad.

The FISS said in a statement that ETO "is not harmful" without elaborating, while it added that: "ETO is extremely effective eliminating (pathogens in spices)".

(Reporting by Sumit Khanna; Writing by Rishika Sadam; Editing by Aditya Kalra and Hugh Lawson)