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Mahamad Rodzi Abdul Ghani




Mahamad Rodzi Abdul Ghani


Business Lines - IND



Import norms eased for vanaspati from Nepal
New Delhi , Oct. 8 - IN yet another step to curb inflationary pressuresduring the coming festival season, the Government has eased norms forduty-free imports of vanaspati from Nepal.

The State Trading Corporation (STC), which is the sole agency authorisedto import the one lakh tonnes (lt) annual quota at nil duty under theIndo-Nepal Treaty of Trade, has now been allowed to rope in `associates'to undertake it.

This is as against the present arrangement, wherein the STC is required to`make' the imports on its own and not through third parties. However, in apublic notice issued on October 4 amending an earlier order dated June 24,the Directorate-General of Foreign Trade (DGFT) extended the facility ofimporting the annual quota to also `associates' appointed by the STC.

Simultaneously, it has granted a further three-month reprieve forutilisation of the one-lt import quota fixed for 2003-04. The normalannual time period for fulfilling the quota entitlement extends from March6 of a calendar year to March 5 of the ensuing year. The treaty also doesnot allow carry-forward of the unutilised quota to the subsequent year.

By this logic, the 2003-04 quota would have ordinarily lapsed on March 5,2004.

But in mid-February, the DGFT extended the zero-duty quota entitlement for2003-04 by three months till June 5. On June 23, this was extended for anadditional three months ending September 5. Now, the DGFT has givenanother extension till December 5, with an additional one lt quota for2004-05 being permitted for import before March 5, 2005.

According to trade sources, despite the repeated extensions given, only60,000 tonnes out of the one-lt quota fixed for 2003-04 have so farentered the country. The reason for non-fulfilment of the quota is STC'sapparent inability to undertake the imports on its own.

The move to allow STC to appoint associate agencies for carrying out theimports is expected to facilitate utilisation of the remaining 40,000tonnes quota for 2003-04 by the specified deadline of December 5, besidesallowing an additional one lt to be imported between December 6, 2004 andMarch 5, 2005 in fulfilment of the 2004-05 quota.

"Adequate supplies from Nepal will ensure that confectioners andmithai-makers will face no shortage of vanaspati in the peak festivalseason", the sources pointed out.

The domestic vanaspati industry is, however, upset with the latest move,having only some time back secured an order from a Calcutta High CourtBench, restraining STC from importing through third parties. The Bench hadeven directed STC to pay the regular MFN (Most-Favoured-Nation) duty of 20per cent on such imports, which, it held, cannot be eligible for dutyexemption under the Treaty.

The industry's grouse against allowing third party imports was that theentire vanaspati coming in through this was being `dumped' in the mainnorthern consuming market and STC was not taking steps to ensure uniformdistribution across the country.

But according to the DGFT, the associate agencies appointed would "importthe specified quantity subject to the overall responsibility of STC, whowill ensure its distribution and monitoring as per the Government policy".

Import of one lt of vanaspati at current wholesale prices in Delhitranslates into a business of about Rs 500 crore.