The Hindu Business Line : Vanaspati cos hit by duty structure: PHD Chamber

THE growth of the vanaspati sector has been affected by an ``inverted'' duty structure coupled with the increasing import of the commodity from Malaysia, posing a potential threat to its very survival in the country, the PHD Chamber of Commerce and Industry (PHDCCI) has said.

In a representation to the Ministry of Finance, the chamber pointed out that it was increasingly becoming difficult for the sector to maintain its existing operations due to unfair competition from duty-free import of vanaspati from Nepal and Sri Lanka under the respective FTA/Trade Treaty.

``At the same time, there has been a surge in imports of vanaspati/hydrogenated edible oils from Malaysia,'' the representation pointed out.

Raising concerns over the ``inverted'' duty structure regarding vanaspati, the chamber noted that the sector had to pay customs duty at the rate of 80 per cent on import of crude palm oil, which is the basic raw material for manufacture of vanaspati.

``On the other hand, import of vanaspati from Malaysia attracts customs duty of only 30 per cent, thus leading to inflow of cheaper vanaspati, to the detriment of the Indian vanaspati industry,'' it said.

It further pointed out that due to these anomalies Indian vanaspati was costlier by Rs 8,812 a tonne or Rs 8.80 a kg as compared to Malaysian vanaspati.

Considering this, PHDCCI urged the Government to remove the anomaly by either reducing the customs duty on crude palm oil or by increasing the effective rate of customs duty on import of vanaspati from the present 30 per cent to 90 per cent.

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