According to Vanaspati Manufacturers Association chairman Pramod Dugar, this has affected the entire industry in the region.

Dugar said, "The imports from Nepal have increased to more than 15,000 tonnes per month now a days from 900 tonnes per month around the time the Indo-Nepal trade treaty was signed."

Following the treaty Nepal is enjoying the advantage of importing duty duty inputs for its vanaspati industry from India such as vanaspati crude, Dugar said.

Nepal, on the other hand, charges a negligible export duty of three per cent on their exports of such oil to India. However, this export tariff was as low as 0.5 per cent before July this year and was revised only after repeated persuasion by the government of India, KusumProducts Limited general manager Kunal Banergee said. In addition to this, there is a two per cent Saarc game duty on export which accounts for a total five per cent duty on exports, Banerjee said.

But the meagre tariff barrier too has been diluted since the Nepal government has started providing draw back facilities to the vanaspati exporters so that cost of their products may get a competitive edge over the Indian products, he said.

The tariff benefit coupled with low cost import of vanaspati crude from India has facilitated the Nepal vanaspati makers to sale their products for Rs 80 cheaper per 15 Kg pack than that of Indian products which is presently being sold between Rs 797 and Rs 790 per 15 Kg tin.

The increasing threat from Nepal vanaspati has affected the production of vanaspati units scattered around this region to a great extent. As on April 30, 1998 the capacity utilisation of these units stood at 21.7 per as against 33.5 per cent recorded earlier. Both Dugar and Banerjee assigned similarreasons for Indian vanaspati being comparatively costlier. According to them, the vanaspati industry has to pay a duty of 15 per cent on the import of inputs such as crude edible oils and other materials.

However, this duty was earlier about 19 per cent. After the withdrawal of Special Additional Tariff at the rate of 4 per cent by an recent order by the finance ministry it stands currently at 15 per cent.

The industry has sent a presentation to the Union Food and Consumer affairs ministry for further cut in import duty to provide a level playing ground with Nepal Vanaspati.

Whether industry has passed on this benefit of elimination of four per cent SAT to its consumers, when asked Banerjee said, "Not yet. The order has just been effected a couple of days ago and now and we are about to calculate the cost to what extent this provides a boost."