30/11/06 (Newkarala.com) New Delhi -  The Indian Vanaspati Producers' Association (IVPA) has asked for the custom duty on crude palm oil to be brought down to 20 per cent on actual user basis, in order to compete with vanaspati imported from Sri Lanka and Nepal.

In a representation to the Government, IVPA said a correction should be made in the duty structure of palm oil, which is the main raw material in vanaspati manufacturing and should be brought down to 20 per cent on actual user basis.

"This is a long-term and sustained solution for correction of the unviable FTA terms with these countries," IVPA Executive Director I R Mehra said.

The association has sought restoration of NAFED as the main canalising agency and demanded reduction in the limit of Lankan vanaspati to one lakh tonnes from the current 2.5 lakh tonnes.

Nepal also enjoys duty-free export of vanaspati to India under the Free Trade Agreement although there is a cap of one lakh tonnes per annum.

Public sector State Trading Corporation has been appointed as the canalising agency through which imports from Nepal are to enter India.

IVPA said the main beneficiary of India's decision to cap the Lankan vanaspati at 2.5 lakh tonnes would be Sri Lankan manufacturers, who would gain over Rs 8,000 per tonne after meeting all costs.

"In one year, a factory with 25,000 tonnes production capacity will earn a profit of over Rs 20 crore," it said adding "it would have recovered its capital cost twice over".

--- PTI