The Hindu Business Line : Budget leaves vanaspati industry disappointed

New Delhi March 9 Vanaspati makers have termed the exemption given to edible oil imports from the 4 per cent additional countervailing duty (CVD) in the 2007-08 Union Budget as "too insignificant" to have any impact on domestic prices.

In a release issued here, the Indian Vanaspati Producers' Association (IVPA) said the exemption from the 4 per cent additional CVD on imported crude palm oil (CPO) would translate into cost savings of about Rs 1,400 a tonne. But this would do nothing to change the present inverted duty structure on vanaspati.

After the latest duty change, the industry's main raw material (CPO) would be importable at 61.8 per cent (60 per cent basic duty plus 3 per cent cess on basic duty). As against this, the final product (vanaspati) is importable from Nepal, Sri Lanka and other South Asian countries under Free Trade Agreements (FTA) at zero duty.

Moreover, manufacturers in Nepal are allowed to import CPO at nil duty, while those in Sri Lanka can at a nominal $25 per tonne. As on date, the differential duty difference on CPO confers a raw material cost advantage of Rs 9,000 per tonne to these manufacturers and they are able to sell the final product around Rs 4,000 per tonne cheaper than leading Indian brands.

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