Vanaspati Imports From Lanka Capped

New Delhi: In a relief for domestic producers of vanaspati (vegetable fats), the Centre has now stipulated that the total quantum of import of vegetable fats under the Indo-Sri Lanka Free Trade Agreement (FTA) would be restricted to 2.5 lakh tonnes a year.

Besides bringing vanaspati and margarine imports from Sri Lanka under a quota system (insisting on Tariff Rate Quota certificate), the Director General of Foreign Trade (DGFT) has also placed port restrictions on their imports into the country.

It has also now been specified that the import quota of 2.5 lakh tonnes would be allocated by the Sri Lanka Government in four equal quarterly tranche. Import quota of one quota will not be allowed to be carried out to the next quarter.

Under the new procedure for vanaspati imports, the ports through which imports will be allowed are Mumbai, JNPT/Nhava Sheva, Kandla, Chennai, Cochin, Tuticorin, Visakhapatnam, Kolkata, Haldia, Kakinada, New Mangalore, Mormugoa and Mundra. Imports will also be allowed through inland container depots (ICDs) in Tughlakabad, Ludhiana, Ahmedabad, Kanpur, Indore and Faridabad.

The India-Sri Lanka FTA was signed on December 28,1998 and implemented from March 2000. Under the FTA, zero duty entry of Sri Lankan goods were allowed since March 2003 except for items kept in sensitive/negative list. The balance of trade continues to be in India’s favour, with the country’s exports to Sri Lanka during April-December 2007 at Rs 1,916.13 crore and imports from Sri Lanka in the same period at Rs 330.52 crore.

Relief Unlikely For Vanaspati Units From New Order

Mumbai: The Centre’s move to remove the mandatory use of indigenous oils such as mustard oil in the manufacture of vanaspati is unlikely to bring any substantial relief to the beleaguered industry. Run-up to Budget 2008-09

Vanaspati producers are now free to use any oil or a combination of oils – indigenous and/or imported – as raw material for the finished product. The decision seems to have been necessitated by present market conditions of strong vegetable oil prices and poor outlook for the upcoming rapeseed/mustard crop.

While there is freedom to use any oil or combination of oils, given the level of prices and vanaspati’s shrinking share of the country’s oils and fats market, the industry’s fortunes are unlikely to see any change.

Instead of examining and addressing the structural issues that stymie the vanaspati industry as also the entire vegetable oil complex - including oil mills, solvent extraction, refining - the policymakers are content with tinkering with policies that related to trade and prices. The entire vanaspati industry – or what is left of it just now – would now start to consume imported oils – mainly crude palm oil – for its raw material requirement.

Of the over 220 factories in the country, more than half are either sick or closed, while the others operate at substantially lower capacities. Low priced imports from Nepal and Sri Lanka at continue to adversely affect the industry’s economics.