25/11/2008 (Money Control), Mumbai - The ongoing tussle between the liquid oil trade and the domestic vanaspati industry has intensified with the latter making a strong pitch for continuing the current duty structure for palm oil and palm kernel oil.

Crude palm oil is a critical raw material for the vanaspati (hydrogenated oil) industry and is currently allowed for import at nil duty.

Anomalous situation
Demand for imposition/ hike in customs duty on the palm group of oils has gathered momentum after the Government levied a 20 per cent duty on crude soyabean oil recently. This has led to an anomalous situation of the raw material bearing a higher rate of duty than the finished product. Refined soybean oil bears 7.5 per cent duty.

In a representation to the Ministry of Food and Agriculture, the combine of Vanaspati Manufacturers Association of India and the Indian Vanaspati Producers Association, both New Delhi-based, have argued against any change in the duty structure for palm group of oils.

Asserting that the recent hike in duty on crude soyabean oil has brought huge profits to traders and nothing to growers despite express intentions, the two industry bodies have pointed out that depreciation of the rupee by about 25 per cent by itself acts as a protective tariff mechanism.

It is unclear what the Government will do; but we will have to be ready to face the worst kind of decisions from the Government when elections are round the corner, is how a local trader philosophically summed up the situation when queried by Business Line.

Demand for imposition/ hike in customs duty on the palm group of oils has gathered momentum after the Government levied a 20 per cent duty on crude soyabean oil recently. This has led to an anomalous situation of the raw material bearing a higher rate of duty than the finished product. Refined soybean oil bears 7.5 per cent duty.