The Hindu Business Line : `Place vanaspati imports in negative list of trade pact with Nepal, Lanka'

THE Vanaspati Manufacturers' Association of India has demanded that vanaspati be placed in the `negative list' of imports under the India-Nepal Treaty of Trade and the India-Sri Lanka Free Trade Agreement.

Under these agreements, vanaspati imports up to one lakh tonnes (lt) per annum from Nepal are allowed at zero duty, while no such quantitative ceiling applies for those from Sri Lanka.

"The 100-per cent customs duty concession on import of vanaspati has resulted in the setting up of 12 factories in Nepal and 10 in Sri Lanka with large production capacities mainly for export into Indian markets," the association said in a representation to the Prime Minister, Dr Manmohan Singh, here on Monday.

The representation said the vanaspati units in these countries were mostly set up by Indian-origin entrepreneurs "to dump cheaper vanaspati into the Indian markets and legally evade payment of customs duty at the cost of the Indian public."

According to the association, domestic vanaspati units were hampered as they had to fork out an 80-per cent customs duty on imported crude palm oil, the primary raw material, whereas manufacturers in Nepal and Sri Lanka were obtaining 100-per cent duty drawback on these against export of the finished product (vanaspati).

Also, while indigenous manufacturers are required to use a minimum of 12 per cent of indigenous edible oils in making vanaspati, there was no such stipulation in Nepal or Sri Lanka.

The representation said while the free trade agreements with these countries restricted use of third country material, it was only on the basis of free-on-board value or ex-factory price of the finished product.

"In this case, the high rate of customs duty on crude palm oil in India has enabled manufacturers in Nepal and Sri Lanka to easily fulfil the Rules of Origin stipulation to be eligible for 100-per cent duty concession," the representation said.

In case imports cannot be placed in the negative list, there should be a stipulation that only vanaspati manufactured from raw material wholly produced in the contracting export country should be allowed, it added.

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