Vanaspati trade seeks cap on Lanka imports

KOLKATA: The vanaspati industry has requested the government to allow only one lakh tonnes of duty-free vanaspati to enter from Sri Lanka into the country through the canalising agency National Agricultural Co-operative Marketing Federation of India (Nafed).

Following the Free Trade Agreements (FTA), signed between the countries, it has been assured by Sri Lanka that not more than 2.5 lakh tonnes of duty-free vanaspati will be exported from that country to India. But with no monitoring mechanism in place, the import has crossed past 2.7 lakh tonnes between September ‘05 and March ‘06 and is expected to touch about 3 lakh tonnes by end-May.

Heeding to the industry’s plea that unhindered flow of duty-free vanaspati from the southern neighbour is ruining its small and medium-sized players, the director general of foreign trade (DGFT) has allowed the import only through Nafed with effect from June 2.

“But this is not all. To put an effective check on the duty-free vanaspati import from Sri Lanka, we have requested the commerce ministry to freeze the import at 1 lakh tonne per annum,” an industry official said. The suggestion has been made on the line of the duty-free import of vanaspati from Nepal, which has been pegged at 1 lakh tonnes per annum under the revised Indo-Nepal treaty. The import is being canalised through State Trading Corporation (STC).

After receiving the proposal from the industry, the ministry is likely to discuss the imposition of a tariff-related quota (TRQ) on such an import while meeting the Sri Lankan authorities by June-end. Since the issue has to be settled through mutual negotiations, the ministry is non-committal about the size of the tariff-related quotaat this juncture, he said.

The industry has also requested the commerce ministry to allow its import only through Nafed and not through any of its associates. In order to reduce the hassles of its distribution, Nafed should first try to sell bulk of the import to defence establishments and the remaining to private parties, the industry suggested.

Incidentally, the present system of allowing import of duty-free vanaspati from Nepal through associates of State Trading Corporation has caused some resentment among the industry.

Since the food ministry is also involved in determining the procedures of distribution of the imported vanaspati, the industry has requested it to decide soon on labelling, pricing and quality norms for the imported vanaspati from Sri Lanka.