Sri Lanka to cap exports of vanaspati to India

New Delhi, Nov 9 (UNI) To limit the damage to local industry from duty free imports, Sri Lanka today said it will limit exports of vanaspati oil to India at 2.50 lakh tonnes per annum.

The Indian industry will have to brace up for the free trade agreement (FTA) negotiations and not wait for domestic reforms to prepare them for the big change, Commerce Secretary G K Pillai said at a CII conference here.

''It is FTAs that will drive the domestic reforms and not vice versa,'' he said, adding under the India-Sri Lanka FTA it has been decided to limit the exports of vanaspati to India at 2,50,000 tonnes per annum.

With this decision, India is likely to take back the order making it mandatory to route imports through national agricultural cooperative marketing federation, official sources said.

The Secretary said the government is conducting a series of FTA negotiations with different countries, including Japan, Korea and Australia. ''Talks with EU are also expected to start in March next year and completed in next two years. We need minute studies on the impact the agreement will have on the industry. The ministry is willing to put in money.'' The real challenge, he said, was negotiations with the developed countries where there was less room for flexibility. ''The industry must look at the time frame such negotiations will take. Discussions with EU may go on for two years and implementation will take another seven-eight years. We are looking at 2015-2018. Once the FTA is implemented, there will be 90 per cent tariff elimination and duties will be come zero.'' Eversince the order was issued in June, imports of edible oil into India from Sri Lanka has come to a standstill.

Imports of vanaspati into India had soared because of the cost difference after the two countries entered into an FTA.

Sri Lanka does not impose duty on palm oil from which vanaspati is made, while in India the duties are as high as 80 per cent. This puts Sri Lanka at an advantage, which lured many Indian producers to set up units there.

To examine the issue of inverted duty structure coming into place because of FTAs, a committee headed by Planning Commission Member Anwarul Huda would submit its report in the next seven days to the Prime Minister, he said.

''The report will enable a systematic structure to deal with the issue,'' he added.

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