The Hindu Business Line : `No need to fix safeguard duty on edible oils'

THE Director General of Safeguards has dismissed the application filed by the Mumbai-based Solvent Extractors Association of India (SEAI) for imposition of safeguard duty on edible oil imports to protect domestic producers from injury.

After dwelling at length on the merits or otherwise of the matter, Mr B.K. Mishra, Director-General, in his order concluded, ``I refrain from making any recommendation for the imposition of safeguard duty on imports of vegetable oil (edible grade)''.

He observed that SEAI has not passed the test of scrutiny and sustainability of their application on the basis of which a conclusion to determine the cause of injury and quantify the same for imposition of safeguard duty or otherwise including quantitative restrictions could be arrived at.

The DG (safeguards) dismissed the suggestion for setting up a trigger price mechanism — that is safeguard duty to be imposed only on imports entering at a price lower than a reference price — on the ground that it was legally untenable in the context of safeguard investigation as it would give it a colour of a price-based measure where the low priced imports, although not unfair, would get discriminated and charged to safeguard duty, while the higher priced imports would not attract this duty.

``The fixing of reference prices which will undoubtedly be higher than the prices at which consumer can buy edible oil today will have enormous adverse effect on hundreds of millions of Indian consumers of edible oil who will be forced to reduce their consumption of vegetable oil,'' the order noted.

Welcoming the DG's decision to dismiss the application, Mr D. N. Pathak, Executive Director of Indian Vegetable Oil Processors' Association (IVOPA), who spearheaded the opposition to the safeguard application said, ``The domestic trade and industry is happy it has received a fair and just order from the government. An unwarranted hike in duty and consequent high prices will pull India's low per capita consumption further down and compromise the nutrition security of the country''.

IVOPA members comprise some of India's largest importers and refiners of vegetable oil. The vanaspati industry too is happy over the outcome of the dispute as a significant part of its raw material is sourced from abroad.

Application filed by SEAI to impose safeguard duty resulted in the domestic industry and trade standing divided on the issue. ``There is now a sense of relief and our members can go about their business as usual'' added Mr Pathak.

Safeguard investigation was initiated in May 2002 and a hearing was held towards the end of the year. Several domestic companies and overseas suppliers of edible oil had filed their comments in the form of support or opposition to the application. It is estimated that the entire exercise involved expenditure in excess of Rs 30 lakhs.

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`No need to fix safeguard duty on edible oils'