The ice-cream industry is feeling the heat of rising prices of key ingredient — Skimmed Milk Powder (SMP) and Whole Milk Powder (WMP) — and a surge in cheap imports of the finished product.

The Indian Ice Cream Manufacturers' Association (IICMA) has flagged the issue and raised a demand for putting restrictive measures on imports.

“It is very difficult to put a number to the overall imports by various players of finished products, including ice-cream. But when the domestic manufacturing gets costlier under the increased SMP price scenario, by the time of summer we may see a trend of higher imports of ice- cream at reduced duty,” IICMA president Rajesh Gandhi told Businessline . In the domestic market, SMP prices have hit a peak of ₹330 a kg, whereas the international price works out to around ₹250.

The Association has also written to Union Finance Minister Nirmala Sitharaman requesting duty-free import of raw materials such as SMP, Whole Milk Powder, butter and butter oil. It also sought to impose restrictions on the import of ice- creams, which can be imported at zero duty from Thailand, and at 35 per cent from the rest of the world.

India’s ₹9,000-crore ice-cream market, including frozen deserts, has been growing at 12-15 per cent annually. There are several big players, with Amul in the lead, followed by Mother Dairy, Hindustan Unilever, Cream Bell, Dinshaw’s, Havmor, and Vadilal. In recent years, gourmet flavours have caught the imagination of consumers. Rising incomes and an aspirational middle-class are fuelling the demand for premium ice-creams.

Considering this, many national players have started to position themselves in the premium segment by launching a variety of gourmet brands, some of them completely imported.

It is evident from Union Commerce Ministry data that with the duty benefit under the trade agreement with Thailand, imports from that country have jumped dramatically.

According to Commerce Ministry data, ice- cream imports from Thailand under the HS Code - 21050000 category (which also includes other edible ice without containing cocoa) comprised about 70 per cent of the overall 1,113 tonnes of ice-cream imported during April-October.

Imports from Thailand have increased nearly four times from nearly 187 kg to about 783 kg in a year-on-year comparison for the April-October period.

While international SMP prices work out to around ₹250 a kg, the procurement cost for Indian ice-cream makers is much higher thereby prompting Thailand's suppliers to push their cheaper finished products.

Already, some large FMCG majors, which also have an ice- cream portfolio, have sourced large quantities from Thailand.

“India's procurement cost is higher than Thailand’s. In such a scenario, they get a cost advantage and have a profitable proposition.

So, as we progress from winter to peak demand season of summer, imports from Thailand will rise and there is every possibility of it increasing fiurther,” stated Gandhi, who also heads Vadilal.

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