Indian vanaspati cos in SL seek duty-free refined oil export
Indian edible oil manufacturers like Ruchi and Adani Wilmar who have set up vanaspati units in Sri Lanka are believed to have approached the government for bringing refined oils to India from their facilities as shipping vanaspati has become unvia...
By PTI |
NEW DELHI: Indian edible oil manufacturers like Ruchi and Adani Wilmar who have set up vanaspati units in Sri Lanka are believed to have approached the government for bringing refined oils to India from their facilities as shipping vanaspati has become unviable.
There are 16-17 vanaspati units, each having a capacity of 100 tons per day, in Sri Lanka which were started by the Indian manufacturers to export vanaspati to India taking advantage of free trade agreement between the two nations.
Apart from Ruchi and Adani, the other producers who have set up their facility in Sri Lanka include Hyderabad-based Fats, Foods and Fertlisers, Alwar-based Vijay Solvex and Varanasi-based Jhunjhunwala Vanaspati.
Industry sources, however, said that these manufacturers have now approached the Indian government for allowing them to bring refined edible oils in India instead of vanaspati, which no longer remains an attractive proposition with removal of customs duties on crude palm oil.
India has removed the customs duties on crude edible oils, including palm oil -- the main ingredient in making vanaspati -- and has reduced the import duties on refined oils and vanaspati to 7.5 pc.
"They went there (Sri Lanka) when the import duty on crude palm oil (CPO) was zero there against 65 pc in India," a source said.
The Indian edible oil majors with manufacturing bases in Nepal and Sri Lanka have written to the Commerce Ministry to make changes in the ITC code allowing them to bring in refined oils from these two countries, sources said.
Their argument is that increased availability of edible oils in India might help government to contain rise in their prices in the domestic market, they added.
But a section of the edible oil industry has opposed any move to tinker with the present arrangement.
They are arguing that since the duty reduction on imported edible oils is a temporary measure taken by the government to cool off domestic prices, there should not be any change in the "present treaty/procedures".
The Indian government last year had imposed a cap on vanaspati imports from Sri Lanka to protect the domestic industry.
And the steps taken by the government to protect domestic industry should not be linked with domestic duty structure, sources said.
There are 16-17 vanaspati units, each having a capacity of 100 tons per day, in Sri Lanka which were started by the Indian manufacturers to export vanaspati to India taking advantage of free trade agreement between the two nations.
Apart from Ruchi and Adani, the other producers who have set up their facility in Sri Lanka include Hyderabad-based Fats, Foods and Fertlisers, Alwar-based Vijay Solvex and Varanasi-based Jhunjhunwala Vanaspati.
Industry sources, however, said that these manufacturers have now approached the Indian government for allowing them to bring refined edible oils in India instead of vanaspati, which no longer remains an attractive proposition with removal of customs duties on crude palm oil.
India has removed the customs duties on crude edible oils, including palm oil -- the main ingredient in making vanaspati -- and has reduced the import duties on refined oils and vanaspati to 7.5 pc.
"They went there (Sri Lanka) when the import duty on crude palm oil (CPO) was zero there against 65 pc in India," a source said.
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"Since these units were set up solely to export vanaspati to India and there was no such demand of the hydrogenated oil in Sri Lanka, they have to either close their units or make changes to produce refined edible oils," an expert said.The Indian edible oil majors with manufacturing bases in Nepal and Sri Lanka have written to the Commerce Ministry to make changes in the ITC code allowing them to bring in refined oils from these two countries, sources said.
Their argument is that increased availability of edible oils in India might help government to contain rise in their prices in the domestic market, they added.
But a section of the edible oil industry has opposed any move to tinker with the present arrangement.
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It is learnt that an industry body of vanaspati makers has written a letter to Commerce Minister Kamal Nath and Food Minister Sharad Pawar to preempt any move to change the current conditions in the FTA.They are arguing that since the duty reduction on imported edible oils is a temporary measure taken by the government to cool off domestic prices, there should not be any change in the "present treaty/procedures".
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The domestic vanaspati manufacturers have said that it took considerable time for the Indian government to convince the authority in Sri Lanka for putting a maximum limit on imports.The Indian government last year had imposed a cap on vanaspati imports from Sri Lanka to protect the domestic industry.
And the steps taken by the government to protect domestic industry should not be linked with domestic duty structure, sources said.
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