Panel moots concessional crude palm oil sale

An inter-ministerial group set up to examine issues pertaining to duty-free import of vanaspati from Nepal and Sri Lanka has recommended that the government consider making crude palm oil available to domestic units at a concessional rate.

The quantum of crude palm oil enjoying concessional duty could be equal to the amount of palm oil used for manufacturing vanaspati exported by Nepal and Sri Lanka to India, the panel has suggested.

Government officials said the group, which submitted its report last week, was also of the view that the concessional crude palm oil should be imported and distributed through a canalising agency and made available only to existing and functional domestic units.

Vanaspati manufacturers in Sri Lanka and Nepal import palm oil at zero duty, while their counterparts in India have to pay 80 per cent duty on crude palm oil, making the domestic vanaspati more costly.

Officials said the proposal would now be examined by the Department of Food and Public Distribution. The group has also suggested that India should consider imposing a tariff rate quota for vanaspati imports from Sri Lanka on the lines of Nepal. India has imposed a TRQ up to one lakh tonne in case of Nepal.

Accordingly, vanaspati from Nepal can be imported duty-free up to one lakh metric tonne and is canalised through the State Trading Corporation and its associates.

"There is a suggestion to cap duty-free imports of vanaspati from Sri Lanka at 2.5 lakh metric tonne per year," an official said adding that this should include bakery shortening and margarine.

India imports one lakh metric tonne of vanaspati from Nepal, while imports from Sri Lanka is estimated at around one lakh metric tonne a year.

There are, however, fears that imports from Sri Lanka could increase to 2.5 lakh metric tonne, once the 10 vanaspati manufacturing units located there with 25,000 tonne annual capacity each become fully operational.

Officials said the agriculture ministry was not in favour of a reduction in import duty of palm oil of 80 per cent as this could impact oil seed growers particularly of arid regions.

"Importing part of the crude palm oil at concessional rate could be a workable option but has to be discussed with the finance ministry since it has revenue implications," they said.

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The gameplan

• Quantum of crude palm oil enjoying concessional duty could be equal to the amount of palm oil used for manufacturing vanaspati exported by Nepal and Sri Lanka to India
• Imports and distribution suggested through a canalising agency
• Only existing and functional domestic units to get the supply
• Proposals would now be examined by the Department of Food and Public Distribution
• Group has also suggested that India consider imposing a tariff rate quota for vanaspati imports from Sri Lanka on the lines of Nepal