Financial Daily from THE HINDU group of publications
Thursday, Mar 18, 2004
Oilseeds & Edible Oil
Agri-Biz & Commodities - Oilseeds & Edible Oil
Malaysian vanaspati worries domestic producers
Mumbai March 17
AFTER Nepal and Sri Lanka, it is Malaysia now for the beleaguered Indian vanaspati industry to worry about.
Vanaspati (hydrogenated vegetable oil) from Malaysia has started to flow into the country, albeit in small lots.
In the last few days, three container loads of the popular cooking medium (approximately 20 tonnes per container) that entered the country were cleared at Chennai and Kakinada ports. Around 50 container loads (totalling 1,000 tonnes) are said to be in transit and are expected to arrive shortly at a southern port.
"These imports (small lots) are sort of test cases to see if customs and health authorities raise any questions; once a few lots get cleared smoothly, more imports are expected," according to a trade intermediary.
After removal of quantitative restrictions on imports, there is no bar on vanaspati imports. The rate of customs duty on the item is 30 per cent ad valorem. In addition, there is a countervailing duty of Rs 1,250 a tonne (equivalent to excise duty on manufacture of vanaspati domestically).
Vanaspati manufacturers are concerned over this new development. What has started as a trickle has the potential to turn into a tide of imports, they apprehend. Speaking to Business Line, Mr Pramod Dugar, Chairman of the New Delhi-based Vanaspati Manufacturers Association of India (VMA), said these imports would surely hurt the vanaspati industry, which is already passing through a difficult period.
Ironically, as per extant policy of the Government, while the raw material (say, crude palm oil) for making vanaspati attracts customs duty of 65 per cent, duty on the finished product itself (vanaspati) is much lower at 30 per cent.
On condition of anonymity, a trade representative who saw the imported cargo at Chennai told this correspondent that Malaysian vanaspati was packed in 15 kilogram plastic bag with corrugated box as secondary packing. The label described the product as hydrogenated vegetable oil for bakery purpose and the price was printed as Rs 900, he confided.
Although vanaspati imports from Nepal in recent years and lately from Sri Lanka have been agitating the domestic industry, such imports from Malaysia did not materialise until now for the reason that the Prevention of Food Adulteration Rules here specify mandatory use of sesame oil (two per cent) as tracer. The consignments now coming into the country are said to contain sesame oil as specified in the label.
"Based on our apprehensions of large-scale imports, we had already moved the Government sometime ago to stop vanaspati imports. We have been promised remedial action when the threat actually translates into physical imports," Mr Dugar remarked adding that the policymakers must move in quickly to plug the loophole before more damage in done to the domestic industry.
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