The Hindu Business Line : Cap on duty-free vanaspati imports from Lanka

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Cap on duty-free vanaspati imports from Lanka

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Centre fixes 2.5 lakh tonnes limit; shipments de-canalised

Shipment norms
Henceforth, importers are required to only make an application to the DGFT's Exim Facilitation Committee
The importer will also have to produce a Certificate of Origin issued by the concerned Sri Lankan authorities

New Delhi , Nov. 21

The Centre has de-canalised duty-free imports of vanaspati from Sri Lanka, while simultaneously fixing a quantitative limit of 2.5 lakh tonnes (lt) for such imports from the island nation.

"The total quantum of import of vanaspati including bakery shortening and margarine under Indo-Sri Lanka Free Trade Agreement shall be restricted to 2.5 lt per annum," according to a public notice issued by the Directorate General of Foreign Trade (DGFT) here on Tuesday.

Notification withdrawn

It has also "withdrawn" an earlier notice of June 2, appointing the National Agricultural Co-operative Marketing Federation of India (Nafed) as the canalising agency for undertaking these imports.

Henceforth, importers are required to only make an application to the DGFT's Exim Facilitation Committee along with a pre-purchase agreement from any eligible vanaspati exporter from Sri Lanka.

Pre-purchase pact

"The pre-purchase agreement must indicate the quantity and the duration of fulfilment of the contract.

The list of eligible exporting entities of the item from Sri Lanka shall be decided by the Government of Sri Lanka," the notice stated.

The importer will also have to produce a Certificate of Origin issued by the concerned Sri Lankan authorities at the time of clearance of the consignment, it added.

The latest move is bound to upset the domestic industry, which has been crying foul over the "dumping" of vanaspati from the island nation.

As per official data, imports from Sri Lanka, which were a mere 27 kg in 2002, have shot up to 10,522 tonnes in 2004 and 1,70,573 tonnes in 2005.

Hefty duty

"We are paying a hefty 78.2 per cent import duty on crude palm oil, which is the main raw material for vanaspati. The Sri Lanka manufacturers have to pay just a nominal $25 per tonne duty, while they enjoy duty-free access to our market," said Mr S. Gurumoorthi, Secretary of the Vanaspati Manufacturers Association of India.

This is similar to the Indo-Nepal Treaty of Trade, where, too, there is a provision to annually import one lt of vanaspati at nil duty.

Again, the Nepal Government's policy allowing duty-free import of raw material has encouraged investors to use the country as a manufacturing base to `dump' low-cost vanaspati in the northern States.

Ironically, the majority of these units have been set up by Indian companies themselves.

Those producing vanaspati in Sri Lanka now include Adani Wilmar Ltd, Gujarat Ambuja Exports, Ruchi Soya, Foods Fats & Fertilisers Ltd, Vijay Solvex, Jhunjhunwala Vanaspati and the Dainik Bhaskar Group.

"By allowing imports up to 2.5 lt and without any canalising agency to regulate these, our operations will be hit further," Mr Gurumoorthi added. Domestic vanaspati production is currently estimated at around 10.5 lt.

Cap on Pepper import

The DGFT has also fixed an annual import limit of 2,500 tonnes for pepper under the Indo-Sri Lanka FTA.

The total import of desiccated coconut has been restricted to 500 tonnes at a concessional duty of 30 per cent.

The procedure for their imports is the same as that for vansapati.