India allowing duty-free import of edible oil from Bangladesh and Sri Lanka under South Asian Free Trade Area (Safta) framework has raised the hackles of the domestic industry.
The domestic cooking oil body is concerned that imports from Bangladesh and Sri Lanka have the potential to hurt the Indian refiners and millers. In March this year, the Indian government effected a 3-percent increase in the import duty on edible oils, leading to a decline in import of vegetable oils in June.
However, edible oil traders and bulk buyers switched to the Safta, which allows duty-free imports, to get away with the import duty.
Trade sources said a ship carrying 10,000 tonnes of edible oil has already reached the Haldia port in West Bengal and another vessel with an identical quantity is likely to reach the Mumbai port soon.
Earlier, such imports used to be in the region of 1,000 tonnes by land routes, said BV Mehta, executive director of the Solvent Extractors' Association of India.
He said refined palm oil import from non-Safta countries attracts 59.4 percent duty and the import duty for refined soybean oil is 49.5 percent.
But the same is being imported from Bangladesh and Sri Lanka under the Safta at much cheaper rates, affecting the domestic industry, he added.
Mehta favoured putting the import of edible oils on the negative list of goods under the Safta, saying cheaper imports would affect Indian oilseed farmers.
India allows the duty-free import of edible oil under the Safta on condition that the products are native to the country or get 30 percent value addition.