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Harish Damodaran
K.R. Srivats

New Delhi , Oct. 8

IN yet another step to curb inflationary pressures during the coming festival season, the Government has eased norms for duty-free imports of vanaspati from Nepal.

The State Trading Corporation (STC), which is the sole agency authorised to import the one lakh tonnes (lt) annual quota at nil duty under the Indo-Nepal Treaty of Trade, has now been allowed to rope in `associates' to undertake it.

This is as against the present arrangement, wherein the STC is required to `make' the imports on its own and not through third parties. However, in a public notice issued on October 4 amending an earlier order dated June 24, the Directorate-General of Foreign Trade (DGFT) extended the facility of importing the annual quota to also `associates' appointed by the STC.

Simultaneously, it has granted a further three-month reprieve for utilisation of the one-lt import quota fixed for 2003-04. The normal annual time period for fulfilling the quota entitlement extends from March 6 of a calendar year to March 5 of the ensuing year. The treaty also does not allow carry-forward of the unutilised quota to the subsequent year.

By this logic, the 2003-04 quota would have ordinarily lapsed on March 5, 2004.

But in mid-February, the DGFT extended the zero-duty quota entitlement for 2003-04 by three months till June 5. On June 23, this was extended for an additional three months ending September 5. Now, the DGFT has given another extension till December 5, with an additional one lt quota for 2004-05 being permitted for import before March 5, 2005.

According to trade sources, despite the repeated extensions given, only 60,000 tonnes out of the one-lt quota fixed for 2003-04 have so far entered the country. The reason for non-fulfilment of the quota is STC's apparent inability to undertake the imports on its own.

The move to allow STC to appoint associate agencies for carrying out the imports is expected to facilitate utilisation of the remaining 40,000 tonnes quota for 2003-04 by the specified deadline of December 5, besides allowing an additional one lt to be imported between December 6, 2004 and March 5, 2005 in fulfilment of the 2004-05 quota.

"Adequate supplies from Nepal will ensure that confectioners and mithai-makers will face no shortage of vanaspati in the peak festival season", the sources pointed out.

The domestic vanaspati industry is, however, upset with the latest move, having only some time back secured an order from a Calcutta High Court Bench, restraining STC from importing through third parties. The Bench had even directed STC to pay the regular MFN (Most-Favoured-Nation) duty of 20 per cent on such imports, which, it held, cannot be eligible for duty exemption under the Treaty.

The industry's grouse against allowing third party imports was that the entire vanaspati coming in through this was being `dumped' in the main northern consuming market and STC was not taking steps to ensure uniform distribution across the country.

But according to the DGFT, the associate agencies appointed would "import the specified quantity subject to the overall responsibility of STC, who will ensure its distribution and monitoring as per the Government policy".

Import of one lt of vanaspati at current wholesale prices in Delhi translates into a business of about Rs 500 crore.

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