Duty-free vanaspati from Sri Lanka may be halted

India is considering invoking unilateral safeguard measures under its free trade agreement (FTA) with Sri Lanka as duty free imports of vanaspati from the island nation surged to touch 1.70 lakh tonnes in 2005 compared with 0.10 lakh tonnes in 2004.

The issue of invoking safeguard measures under Article 8 of the FTA was discussed earlier this week at a meeting between Commerce and Industry Minister Kamal Nath and Agriculture Minister Sharad Pawar.

A committee headed by Prime Minister's Principal Secretary TKA Nair is also examining the issue of duty free imports of vanaspati coming into India under the bilateral trade agreements with Sri Lanka and Nepal.

Article 8 of the India-Sri Lanka FTA states, "if any product, which is the subject of the preferential treatment under this agreement, is imported into the territory of a contracting party in such a manner or in such quantities as to cause or threaten to cause serious injury in the importing contracting party, the importing contracting party may, with prior consultations except in critical circumstances, suspend provisionally without discrimination the preferential treatment accorded under the agreement."

The issue has assumed importance following representations received from the domestic vanaspati industry.