The vanaspati industry in the eastern states is struggling for survival due to uneven competition from the Nepalese vanaspati being imported in large quantities free of any duty.
"About 50 per cent of the vanaspati units in the eastern zone have closed down and the capacity utilisation in the rest has fallen to 22 per cent, against the all-India average of 34 per cent", said Vanaspati Manufacturers' Association chairman Pramod Dugar in a press conference, here, yesterday.
The Indo-Nepal trade treaty of December 1991 and its revised version of 1996 envisages unrestricted imports of vanaspati alongwith several other items from Nepal without any import duty.
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Consequently, about 80 per cent of the Nepal's total vanaspati production of 1.22 lakh tonnes lands up in India.
Dugar said the Indian vanaspati industry had been denied level playing field as the indigenous units pay 16.5 per cent import duty on crude vegetable oils and 32 per cent on refined edible oils for the manufacture of their product.
Nepalese vanaspati units get duty-free imported oils for making their product.
"The Nepalese vanaspati factories, thus, enjoy a price advantage of nearly Rs 60 to Rs 70 per tin of 15 kg", he said.
They pay only a meagre export duty of three per cent on exports to India.
He said the government should either impose a minimum 16.5 per cent custom duty on Nepalese vanaspati or waive the import duty on crude edible oils being imported by the Indian vanaspati manufacturers.
The government could also persuade Nepal to raise the export duty on vanaspati destined for India to 16.5 per cent.
Any of these measures would ensure a relatively more level playing field for the Indian and Nepalese vanaspati manufacturers, he said.
The trade treaty has provisions for a review in case the surge in imports of any particular item starts hurting the interests of the domestic producers, Dugar said.