Vanaspati industry seeks flat duty on palm oil imports

The vanaspati industry has sought customs duty at Rs 4,000 a tonne for import of crude palm oil (CPO) to make the hydrogenated vegetable oil in the country.

In its pre-budget memorandum to the Finance Ministry, the Indian Vanaspati Producers Association (IVPA) demanded "a flat rate of duty at Rs 4,000 a tonne be levied instead of present advoleram duty structure on CPO".

The flat duty on CPO may be made exclusively for the production of vanaspati in the country, IVPA said in a release. Crude palm oil is a major raw material for vanaspati.

According to the manufacturers' body, the duty rate on CPO at 45 per cent, even calculated at the base price of $447 a tonne, is not adequate to compete with duty-free imports of vanaspati from Sri Lanka.

The government has permitted import of vanaspati at zero duty under bilateral and regional trade agreement with Nepal, Sri Lanka and other neighbouring countries.

IVPA pointed out that imported vanaspati from Sri Lanka costs Rs 810 for 15 kg, while the Indian manufactured vanaspati is Rs 880.

"In Sri Lanka, import duty on CPO is levied at $25 (Rs 1,000) a tonne... Indian vanaspati makers pay Rs 8,225 a tonne," an IVPA official said.

The industry body fears that the survival of the domestic vanaspati units will be difficult in such a duty scenario since the margin is Rs 1-1.5 a kg.

The IVPA also suggested the government to allow vanaspati manufacturers to import CPO at a 20 per cent duty till a decision on flat rate is taken.