Indian desiccated coconut manufacturers are upset over the unbridled imports of desiccated coconut (DC) powder from Sri Lanka, which according to them, is affecting the domestic industry. DC powder is used as an ingredient in savoury and sweet recipes to provide the flavour of coconut.

As huge imports are made at a cheaper ₹80-90 per kg, the domestic price of DC powder has declined to ₹110 against the production cost of ₹130. The lower cost in shipments has facilitated food and confectionery firms and even households, especially in North India, to depend more on imports, said VA Dakshina Moorthy, Vice-President, Federation of Indian Desiccated Coconut Manufacturers.

Already, there is a minimum import price (MIP) for DC powder at ₹150 per kg. But to circumvent this, imports are made under the cattlefeed category where the duty is 8 per cent under the South Asian Free Trade Agreement (SAFTA) and nil under Indo-Sri Lankan Free Trade Agreement. Moreover, the Sri Lankan DC powder has low fat as the milk and oil is removed from the coconut, while the domestic product has high-fat content with good fragrance, he said.

Plea before CDB

The uninterrupted imports have already affected many small and medium industries which are highly labour-oriented with a turnover ranging from ₹5 crore to ₹50 crore. In 2021, imports were 7,000 tonnes, while they reached 6,000 tonnes till August this year and is expected to rise further before the closing of the current fiscal, he said.

The federation members have already approached the Coconut Development Board seeking steps to curb illegal imports from Sri Lanka. CDB officials are reported to have requested Customs Chennai to take action against the import of low-fat DC powder. Federation members pointed out that it is not DC powder alone that is reaching India from Sri Lanka but even coconut flour, and coconut cake from the island nation are finding takers in the Indian domestic market, hitting the domestic industry.

If the import duty on DC powder is increased or imports of coconut products are banned, farmers in the domestic market will get a more remunerative price. India is a major producer of coconut globally and DC powder has emerged as a major value-added product. Because of the cheaper import of low fat DC powder, the adulteration of DC powder in the domestic market is more prevalent, alleged M Arun Kumar, another vice-president of the federation from Karnataka.

The Board should make necessary arrangements to test each sample of all the imported DC powder consignments under different HS codes and certify the fat content. There should be a ban on desiccated coconut powder imports in the interest of domestic industry, rural employment and farmers, he added.