Govt may appoint Nafed as vanaspati canalising agency

The Food and Public Distribution Secretary, R N Das, has indicated that the government is considering to appoint the National Agricultural Cooperative Marketing Federation (Nafed) as the canalising agency for import of vanaspati from Nepal, Sri Lanka and other countries under the free trade agreements. At present, STC is canalising these imports.

Das also agreed to look into the vanaspati industry's demand for re-structuring the customs duty on imported crude palm oil.

He was responding to the demands made by J K Khaitan, president, Indian Vanaspati Producers' Association at the 28th annual session of the organisation.

Khaitan suggested the canalising agency should not be permitted to appoint agents and associates for importing vanaspati directly against the tariff related quota at zero per cent import duty.

"The agents and associates are prone to import large quantities in certain months and dump in the neighbouring states instead of spreading them evenly over the year and distributing in all the states," he said.

He said the average vanaspati imports from Sri Lanka under the free trade agreement was between 15,000 and 17,000 tonne a month. These were likely to go up soon to 20,000 tonne a month.

If vanaspati pours in from other Saarc countries such as Bhutan and Bangladesh, it would be impossible for the domestic industry to sell its product in the local market.

The imported vanaspati had a huge cost advantage of nearly Rs 15,000 a tonne as the industry in those countries imported crude palm oil, a raw material used in vanaspati production at zero duty while the Indian industry was paying 80 per cent duty on the same, he said.

He suggested the crude palm oil should be be imported by the vanaspati industry at a maximum of 20 per cent import duty so that they can compete with the imported vanaspati.

Khaitan said the Indian vanaspati industry was not performing well for last couple of years because of the persistent problems faced by it, especially the competition from cheaper imported finished product and flawed import duty structure.

The capacity utilisation had dropped to only 27 per cent. Besides, about 112 of the total 256 vanaspati plants in the country were currently lying closed.

Responding to these issues, the food secretary said various problems often cropped up for the domestic industry as all implications of the free trade agreements on different products and commodities could not be visualised at the time of entering into these contracts.