The Hindu Business Line : Vanaspati units urged to leverage their strengths to raise demand

INSTEAD of feeling despondent about its future, the country's vanaspati industry should focus on leveraging its strengths like zero cholesterol and long shelf life of the products prepared in it, according to Mr R.N. Das, Secretary, Department of Food and Public Distribution.

Addressing the members of Indian Vanaspati Producers Association (IVPA) in New Delhi, Mr Das said the industry should examine ways and means to increase demand for hydrogenated oil, which has been facing competition from liquid oils. One of the new uses is in the making of frozen dessert (ice cream made with vegetable oil instead of milk), he pointed out.

Regretting the sad plight of the domestic industry following competition from imports from Nepal and Sri Lanka, Mr Das said free trade agreements were a new concept for the country, and on occasions the implications were not apparent at the time of signing the agreement.

The demand for restructuring of customs duty on crude palm oil would be examined on the basis of its ramifications, the Secretary said, adding that the suggestion to make NAFED as the import canalising agency instead of STC would be looked into.

Earlier, Mr J.K. Khaitan, Chairman of IVPA, in his review of the vanaspati industry's status pointed out that the inverted duty structure - high rate on raw material (80 per cent) and low rate on finished goods (30 per cent) - resulted in wholly avoidable flow of bakery shortenings and margarine form neighbouring countries such as Malaysia and Indonesia which gave to importers here an unfair financial advantage of over Rs 8,000 a tonne vis-à-vis domestic producers.

He demanded that vanaspati be placed under the `negative list' of items to be imported from Sri Lanka. Imports from the southern neighbour average 17,000 tonnes a month, with the prospect of the volume going up to 20,000 a month, he asserted.

Cautioning that imports could start from Bhutan and Bangladesh too, Mr Khaitan said import volumes will then potentially aggregate 5 lakh tonnes a year or close to 40 per cent of domestic production with serious consequences for the industry's health.

Vanaspati output in financial year 2004-05 was an estimated 11.5 lakh tonnes, down one lakh tonnes from the previous year because of various problems facing the industry including closure of many units.

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