MUMBAI, Sept 24: India should review the free trade agreement with Sri Lanka, under which imports of vanaspati or hydrogenated vegetable oil are allowed with zero duty, to safeguard the domestic industry, a trade body said.

It said the government should at least cap the present import of vanaspati at 100,000 tons and purchases should be made only by a state-run agency. India’s annual vanaspati imports are estimated at 200,000 tons.

Cheap export of vanaspati from Sri Lanka to India is seriously affecting not only the industry but entire vegetable oil complex of the country, D.P. Khandelia, president of the Solvent Extractors’ Association of India, told an edible oil conference late on Friday.

We strongly appeal to the government to review FTA with the Sri Lanka government.

India and Sri Lanka signed a free trade agreement in 1998 but vanaspati imports started early this year after processing plants were set up in the island nation.

Khandelia said the government should also raise the import duty on vanaspati from other countries to at least 80 per cent to provide a level playing field to domestic manufacturers.

He said currently 15,000 to 20,000 tons of vanaspati were being imported from Malaysia and other countries at 30pc duty while crude palm oil, which is the main raw material for vanaspati, carries 80pc duty. The indigenous industry is under a serious threat from the import of cheap vanaspati, Khandelia said.—Reuters