New Delhi, Feb 25: Already afflicted with the problems of excess capacity and demand stagnation, "large-scale" imports from Nepal are hitting the domestic vanaspati industry hard.There has been a "heavy influx" of vanaspati following the renewal of trade treaty with Nepal in December 1996 which grants full exemption of customs duty on all manufactured goods imported from there.
Whereas the domestic industry is facing a "sickness" situation with 65 units already closed and capacity utilisation falling to as low as 37 per cent, the Nepalese units are allegedly dumping substandard vanaspati in the country.
The industry has demanded a strict monitoring of the inflow of the item from Nepal, as is being done in the case of import of oils under OGL, if a total ban is not possible.
" Once the government is convinced that there is heavy and indiscriminate dumping of substandard vanaspati which is grossly detrimental to the interests of the country, it can invoke clause V 2 (ii) of the Protocol of the Treatyof Trade for obtaining relief", says I R Mehra, executive director, Indian Vanaspati Producers' Association (IVPA).
" The Indian manufacturer is unable to compete because of unfair and unequal competition from the Nepalese units, as their government additionally refunds the full customs duty paid on imported oils used in the manufacture of vanaspati. In comparison, the Indian manufacturer pays 20 per cent (basic) customs duty on the imported oil component", says Mehra.
The Nepalese vanaspati units, he says, thus have an inbuilt cost advantage and are discounting their product by Rs 60 to 70 per 15 litre tin compared to Indian brands.
IVPA also complains that the vanaspati exported by Nepal to India is sub-standard and can be a health hazard for the consumer as has been confirmed by the analysis of some samples in the vanaspati directorate laboratories.
Mehra also alleges that this vanaspati is being sold "surreptitiously under false labels of popular Indian brands which is likely to erode the imageand viability of the Indian industry".
He similarly cautions the government against the danger of cheap exports of vanaspati from SAARC nations.
IVPA has also suggested to the government that the industry be allowed to import crude palm oil at a concessional duty of 10 per cent to improve its viability and capacity utilisation.
The vanaspati industry has to "perforce" use only RBD palmolein as crude palm oil is a canalised item of import through the STC and HVOC and "that too at a higher rate of 30 per cent basic import duty."
By importing RBD palmolein, Mehra says, " the country has been supporting the refining industry of another country whereas our own refining capacities are lying idle".
Outflow of foreign exchange is more on import of RBD palmolein oil as compared to import of crude palm oil of edible grade due to the overall differential of landed price", he says.
Copyright(c)1998 Indian Express Newspapers (Bombay) Ltd.
