Duty on vanaspati from FTA nations

In a bid to safeguard the domestic vanaspati sector from duty-free imports under free trade agreements (FTAs), the government has imposed 4 per cent special additional duty on the commodity's imports from Sri Lanka, Nepal and other countries with which the country has an FTA, with effect from March 20.

The decision has fulfilled a long-standing demand of the domestic vanaspati sector, said BV Mehta, executive director, Solvent Extractors' Association of India.

Imports from Sri Lanka are likely to hit 3 lakh tonne this financial year, as per the association's estimates.

"As the imports are through the duty-free route, they are cheaper than what the products of domestic manufacturers," said Kuldeep Goyal, general manager - commodities, Amrit Banaspati Company Ltd.

The industry was upset that crude palmoil "" a raw material for hydrogenated oils "" is imported at 88 per cent duty from Malaysia, even as duty-free imports of finished products from Sri Lanka and Nepal were flooding the domestic markets.

India has about 260 vanaspati units out of which 120 units have either closed down or are not functional at present.

Over the last few years, the market growth in this sector has stagnated following availability of other cheaper imported oils. Vanaspati is used as a substitute for ghee in most households. Industry estimates vanaspati's domestic market size to be about 12 lakh tonne.