Govt blocks free flow of Lankan vanaspati to India
The government is finally taking some action to check the surge in import of cheap vanaspati from Sri Lanka imported at zero duty under the India-Sri Lanka FTA pact.
By Amiti Sen, TNN |
NEW DELHI: Here is something to for the domestic vanaspati industry. The government is finally taking some action to check the surge in import of cheap vanaspati from Sri Lanka imported at zero duty under the India-Sri Lanka free trade agreement (FTA) pact.
The commerce ministry has decided to canalise imports of vanaspati from Sri Lanka through Nafed to keep a check on the quality of the cooking medium being imported. It has also asked Sri Lanka to impose voluntary restrictions on export of both vanaspati and pepper to India under the FTA.
According to Indian Vanaspati Producers’ Association (IVPA) executive director IR Mehra, canalisation will put a stop to import of inferior quality vanaspati made of 100% imported cheap palm oil. In India, the vanaspati industry has to mandatorily use 12% indigenous oil including sesame oil.
Sri Lankan vanaspati is cheaper as they have to pay an import duty of about Rs 400 per tonne on palm oil while Indian manufactures pay a duty of Rs 17,000 per tonne (88.8%). After India eliminated import duties on vanaspati following the implementation of the FTA in March ‘00, imports from Sri Lanka started rising.
Consequently, local industry has been forced to cut down its production from 14.3 lakh tonne in ‘01-02 to an estimated 9.5 lakh tonne in the on-going vanaspati year.
Speaking to ET, commerce ministry officials said that India has also asked Sri Lanka to impose voluntary restrains on exports like strengthening the rules of origin (ROO) norm. The ROO mandatorily calls for 35% value addition to imported inputs.
Sri Lankan manufacturers unscrupulously include their profit margin in the value addition calculations to inflate figures.
According to industry estimates, Sri Lanka has already exhausted its self-imposed quota of 2.5 lakh tonne of vanaspati in the first six months of the current vanaspati year (Nov ‘05-Oct ‘06). Last year, its vanaspati exports stood at 1.8 lakh tonne.
The commerce ministry has decided to canalise imports of vanaspati from Sri Lanka through Nafed to keep a check on the quality of the cooking medium being imported. It has also asked Sri Lanka to impose voluntary restrictions on export of both vanaspati and pepper to India under the FTA.
According to Indian Vanaspati Producers’ Association (IVPA) executive director IR Mehra, canalisation will put a stop to import of inferior quality vanaspati made of 100% imported cheap palm oil. In India, the vanaspati industry has to mandatorily use 12% indigenous oil including sesame oil.
Sri Lankan vanaspati is cheaper as they have to pay an import duty of about Rs 400 per tonne on palm oil while Indian manufactures pay a duty of Rs 17,000 per tonne (88.8%). After India eliminated import duties on vanaspati following the implementation of the FTA in March ‘00, imports from Sri Lanka started rising.
Consequently, local industry has been forced to cut down its production from 14.3 lakh tonne in ‘01-02 to an estimated 9.5 lakh tonne in the on-going vanaspati year.
Speaking to ET, commerce ministry officials said that India has also asked Sri Lanka to impose voluntary restrains on exports like strengthening the rules of origin (ROO) norm. The ROO mandatorily calls for 35% value addition to imported inputs.
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Sri Lankan manufacturers unscrupulously include their profit margin in the value addition calculations to inflate figures.
According to industry estimates, Sri Lanka has already exhausted its self-imposed quota of 2.5 lakh tonne of vanaspati in the first six months of the current vanaspati year (Nov ‘05-Oct ‘06). Last year, its vanaspati exports stood at 1.8 lakh tonne.
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