Date:20/01/2003 URL: http://www.thehindu.com/2003/01/20/stories/2003012001291300.htm

National

'Reduce import duty on crude palm oil'

By Our Special Correspondent

NEW DELHI JAN. 19. The Associated Chambers of Commerce and Industry of India (Assocham) has suggested that the Government consider reducing duty on imported crude palm oil (CPO) from the current level of 65 per cent to a maximum of 25 per cent as prevailing prior to March 2001.

The Chamber wanted the CPO imports be only permitted to the vanaspati industry against actual user provision to check any malpractice and free imports of the same oil be withdrawn from refiners and traders.

It said the duty provision of 65 per cent on the raw material used by this industry as against 30 per cent for the finished imported product is an anomaly that needs to be rationalised.

The Government had increased the import duty on crude palm oil used as raw material in the manufacture of vanaspati from 25 per cent to 75 per cent.

This was an retrograde step and reversal of the earlier policy introduced in 1999 to give crude palm oil at a concessional duty of 15 per cent and subsequently 25 per cent to the industry.

The country faces edible oils deficit of nearly 4 to 4.5 million tonnes of edible oils. Hence, the Government has liberalised the import of crude palm oil to augment its availability.

A quick analysis carried out by the Assocham reveals that in addition to the higher cost of production and commensurately higher prices to the consumer, the annual growth rate of the industry was not adequate and in conformity with the rise in demand due to increase in population .

However, the capacity utilisation remained as low as 39 per cent. Customs duty has also drastically reduced the industry's capability of competing with the cheap vanaspati coming from Nepal.

The Indian manufacturer was unable to compete in such a scenario and, therefore, the imports of vanaspati from Nepal in the year 2001-2002 mounted to over two lakh tonnes.

However, after the signing of the Indo- Nepal Treaty in March 2002.

The quantitative restriction of duty free imports into India from Nepal has been put as one lakh tonnes per annum, yet it does not ensure a level playing field for the Indian industry.