The Hindu Business Line : Duty-free vanaspati from Nepal: Importers get more time

THE Government has given an additional three months reprieve to importers of vanaspati from Nepal to utilise their zero duty annual quota of one lakh tonnes (lt) for 2003-04.

Under the Indo-Nepal Treaty of Trade entered into by the two Governments on April 30, 2002, the Government allows duty free import of up to one lt of vanaspati on an annual basis. Imports beyond this quota attract the normal Most Favoured Nation (MFN) duty, currently 20 per cent.

For the purposes of quota entitlement, the annual time period extends from March 6 of a particular calendar year to March 5 of the succeeding year. Further, the unutilised quota for a year is not permitted to be carried forward to the subsequent year.

By this reckoning, the current (2003-04) quota year began on March 6, 2003 and would have ordinarily lapsed on March 5, 2004. But the Commerce Ministry has now decided to allow importers to avail of the zero duty quota for 2003-04 for a further three months up to June 5, 2004.

"The time period for import of vegetable fats (vanaspati) for the year 2003-04 shall be extended up to 05.06.2004 and the unutilised quota shall not lapse till this date," the Directorate-General of Foreign Trade (DGFT) said in a public notice issued on Monday.

When contacted, a senior Commerce Ministry official told Business Line that the three months extension has been granted in view of disruptions in imports on account of the Central Warehousing Corporation (CWC) being divested of its role as canalising agency and assigning the job to the State Trading Corporation (STC).

The Commerce Ministry had originally, in April 30, 2002, notified CWC as the sole canalising agency for import of the one lakh tonne annual vanaspati quota from Nepal. Subsequently, on June 6, 2003, STC was also appointed as a canalising agency.

But with a section of the domestic industry obtaining a stay from the Calcutta High Court on CWC's canalisation operations, the Government was, on October 23, 2003, forced to de-notify CWC and make STC the sole canalising agency. This followed complaints by local vanaspati manufacturers that the vanaspati routed through CWC was not being evenly distributed across the country and most of it was being `dumped' in the major northern States.

"All these have meant that the actual imports could begin only from October 2003, by which time more than seven months of the current quota year had passed. So far, hardly 30,000 tonnes of the quota has been used. The three months extension will give importers more time to exhaust their quota entitlement for 2003-04," the official added.

Vanaspati is currently selling at around Rs 800 per 15 kg tin, which is about Rs 53,000 per tonne. Import of one lakh tonne at zero duty would, thus, translate into a business of about Rs 530 crore.

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