Vanaspati imports from Lanka may be capped at 2.5 lt
Financial Express, India
Vanaspati imports from Lanka may be capped at 2.5 lt
ASHOK B SHARMA
19 August 2005
NEW DELHI, AUG 18: Duty-free imports of vanaspati from Sri Lanka under the free trade agreement (FTA) is likely to be capped at 2,50,000 tonne. Vegetable oils and vanaspati (hydrogenated vegetable oil) will be kept out of the purview of any FTAs which India is likely to sign with any country in future.
This was decided jointly by the agriculture minister Sharad Pawar and the commerce minister Kamal Nath. The two ministers took this decision on Wednesday evening as a follow up to the recommendations of the KT Chacko panel.
“Capping of vanaspati imports from Sri Lanka will not endanger trade relation between the two countries. Sri Lanka had earlier agreed to discipline its vanaspati exports at this level,” said a government official.
In July this year, a panel headed by the director general of foreign trade (DGFT) KT Chacko had expressed concern over the rising duty-free imports of vanaspati and had urged the Indian government to ask Sri Lanka to make “drastic reductions in its vanaspati exports on voluntary basis”. Though it had suggested canalisation of vanaspati imports, it did not name as to which agency in the country would canalise vanaspati imports from Sri Lanka.
Chacko panel was apprehensive about capping vanaspati imports as this would amount to an unilateral violation of the FTA. However, the decision to cap vanaspati imports at 2,50,000 tonne would not amount to a violation of agreement between the two countries.
Indo-Sri Lanka FTA, which was signed in December 1998, was implemented from March 1, 2000. After a surge in vanaspati imports, India expressed concern and asked Sri Lanka not to further approve setting up of vanaspati units in the country for exports to India. Sri Lanka then intimated to India that it has approved setting up of 10 vanaspati units and would not give approval for any new units. Most of the vanaspati units set up in Sri Lanka are by Indian entrepreneurs.
Each of these units will export 25,000 tonne of vanaspati per year to India. This totals to a quantity of 2,50,000 tonne of vanaspati to be exported to India against zero duty under Indo-Sri Lanka FTA. At present, six vanaspati units are under operation in Sri-Lanka and about 1,00,000 tonne of vanaspati is being exported to India against zero duty.
Thus, what the two ministers decided in Delhi on Wednesday was in line with the agreement between the two countries. What is now needed is to introduce a clause in the FTA, capping Sri Lanka’s vanaspati exports at 2,50,000 tonne per annum
