Nafed move stymies cheap vanaspati imports

The Government's decision to canalise vansapati imports from Sri Lanka through National Agricultural Cooperative Marketing Federation has helped check entry of cheap vanaspati into the country, trade experts said today.

The government had issued a notification in June that said all vanaspati imports from Sri Lanka under the Free Trade Agreement must be routed through Nafed.

The officials said since then not a single consignment from Sri Lanka has come to India. This is likely to result in rise in local vanaspati production.

The notification was issued against the backdrop of Indian vanaspati makers protesting against the cheap inflow of vanaspati from Sri Lanka.

"We are not afraid of the imports. What we are afraid of is entry of cheap imports which will hamper the domestic units and hence the economy," B V Mehta, executive director, Solvent Extractors' Association of India, said.

As per a self-imposed quota, Sri Lankan vanaspati manufacturers sell around 250,000 tonne of vanaspati and related products to India every year at zero-duty under a free trade agreement between the two nations.

Sri Lankan exports contribute around 35 per cent of the total vanaspati consumed in India.

"For the last one and half years they (Sri Lanka) have been having an advantage over us and they have flooded huge quantities of vanaspati in our markets," I R Sharma, executive director, Indian Vanaspati Producers Association, said.

The main reason, which has aided Sri Lankan manufacturers to export cheap vanasapti, is the low duty on palm oil, the key ingredient needed to make vanasapti.