The Hindu Business Line : Palm oil duty hike proposal upsets soap manufacturers

THE country's soap industry is rather upset with the latest proposal of the Food Ministry to raise the rate of customs duty on non-edible palm oil to 65 per cent, on par with crude palm oil of edible grade (CPO).

Soap manufacturers believe they could become the unintended victims of the proposal following representations made by vegetable oil-based associations against the import of non-edible palm oil at lower rate of customs duty.

The Food Ministry is reportedly in favour of raising the rate of customs duty on CPO and crude palm stearine (CPS). The move is intended to prevent misuse of the two items. This follows reports of unauthorised mixing of CPO and CPS with vanaspati, thereby creating health hazard for consumers.

The Government seems to believe that if the rate of customs duty is raised to make import of CPO (industrial) and CPS more expensive, there will be a disincentive for unscrupulous players to mix them with vanaspati. The move would willy-nilly hurt soap manufacturers, as they would be denied uneconomic raw material.

Mr. A.B. Godrej, Chairman, Godrej Group and former president of Indian Soaps and Toiletries Manufacturers Association, told Business Line that a hike in customs duty might not be the ideal solution to the problem. ``We need to find effective ways to plug the loopholes that create opportunity for misuse. A higher rate of duty will surely hurt the soap industry and deny it access to inexpensive raw material.''

An anomalous situation will arise if the duty on raw material for the industry is raised to 65 per cent because soap itself can be imported under the extant policy at much lower rate. ``We will face a ridiculous situation of steeply higher duty on raw material and lower duty on finished products,''Mr Godrej contended.

The soap industry is expected to soon take up the issue with authorities concerned and suggest appropriate solutions to the ongoing controversy.

Some observers see the latest development as a tussle between the country's vegetable oil refining industry on the one side and the soap industry on the other.

Some of the vegetable oil-based associations have been aggressively representing to the Government to put a stop to import of palm-based products at lower rate of duty.

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