Regulating cheap imports under Indo-Sri Lanka FTA

Our Bureau

The scenario

Currently, the

FTA implemented since March 2000 allows vanaspati imports of up to 2.5 lakh tonnes (lt) annually from Sri Lanka at zero duty.

Industry welcomes

decision as it will bring transparency and reduce dumping.

STC has

already been made canalising agency for imports from Nepal.

New Delhi, June 3

In a bid to regulate inflow of cheap Sri Lankan-origin vanaspati into the country through the Free Trade Agreement (FTA) route, the Government has appointed the National Agricultural Cooperative Marketing Federation of India (Nafed) as the canalising agency for undertaking these imports.

In a public notice, issued on June 2, the Directorate-General of Foreign Trade (DGFT) said that all imports of vanaspati, including bakery shortening and margarine, under the Indo-Sri Lanka FTA "shall be made only by Nafed". Currently, the FTA implemented since March 2000 allows vanaspati imports of up to 2.5 lakh tonnes (lt) annually from Sri Lanka at zero duty. With the island-nation giving the vanaspati industry a host of concessions - including duty-free import of raw material (crude palm oil) as against 80 per cent paid by Indian manufacturers - several export oriented units have come up there mostly targeting the southern Indian market.

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.

"We welcome the latest decision. Canalisation may not bring down the quantum of imports per se, but will help bring about transparency and reduce the incidence of dumping.

"Nafed would be able to ensure proper timing and distribution of the imported vanaspati", Mr B.V. Mehta, Executive Director, Solvent Extractors' Association of India, told

Business Line


In the case of imports from Nepal, the Government has already appointed the State Trading Corporation of India (STC) as canalising agency.

Related Stories:
Vanaspati units oppose imports from Sri Lanka
Sri Lankan vanaspati imports hurting local industry: IVPA
Customs duty hike

Vanaspati industry disappointed

(This article was published in the Business Line print edition dated June 4, 2006)
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