21/02/2008 (Financial Express, India), New Delhi - The tariff structure on vegetable oils has become a contentious issue between the two opposing sections of the industry. The producers of hydrogenated vegetable oil (vanaspati) want the duty on crude palm oil (CPO) to be reduced to 20%, while the manufacturers of refined vegetable oils want the duty to remain at the existing 46.35%, which they say is "already quite low."

Both the sections of the industry have made separate presentations to the Union finance minister, P Chidambaram before the Union Budget, staking their demands with justifications.

The secretary general of Indian Vanaspati Producers' Association (IVPA), SP Kamrah said that the main raw material for the industry, CPO, was being imported at 45% basic duty as against the import of the final product - vanaspati - against zero duty under free trade agreements with Nepal and Sri Lanka. This had made the industry uncompetitive in terms of prices. The cost for Indian producers was Rs 880 for 15 kg pack while that for Sri Lankan producers was Rs 810, he said

The IVPA alleged, "The higher duty on CPO against the duty-free import of vanaspati from neigbouring countries has created a uneven playing field. For example, in Sri Lanka, duty levied on CPO is $ 25 (Rs 1,000) per tonne while in India it is Rs 8,225 a tonne."

Kamrah said that though duty-free import from Nepal was limited to only 100,000 tonne, in actual practice about 150,000 tonne more were being smuggled into India. He demanded that vanaspati producers be allowed to import CPO against a flat rate of duty at Rs 4,000 a tonne instead of the present ad voleram duty. Alternatively, pending this decision, the government should allow vanaspati producers to import CPO at 20% duty.

The chairman of the Central Organisation for Oil Industry and Trade (COOIT), Davish Jain said that with the freezing of tariff values for different grades of vegetable oils at August/September 2006 levels, the effective duty has already become quite low - 18.67% for CPO and 16.81% for crude soybeanoil. Any further reduction in tariff would adversely affect the oilseed growers. Taking advantage of further reduction in tariff, the overseas exporters would raise oil prices imperiling the benefits due to consumers.