Calcutta, Nov. 26: Twelve vanaspati manufacturing units in the eastern region, including eight in Bengal, have downed their shutters for an indefinite period.
This follows negligence of the industry’s repeated representation to both the Centre and the Bengal government regarding market encroachment by cheaper vanaspati from Nepal.
Vanaspati Manufacturers’ Association chairman Pramod Dugar said the association would soon send out a proposal to let the promoters relocate their factories and labour force to Nepal and cater to the eastern region market from there.
Dugar said, “If the government was so eager to help industrialisation of the neighbouring country, it might as well facilitate the entrepreneurs to shift their factories and issue guidelines to financial institutions and banks.”
Following a trade treaty with Nepal allowing duty-free import for manufactured goods, vanaspati produced there is available in the eastern region at Rs 37 per kg, while the cost of production of Indian units works out to Rs 47 per kg, association zonal body chairman Kunal Banerjee said.
The difference is primarily due to the Rs 16 per kg customs duty paid by Indian manufacturers on crude palm oil brought from Malayasia, while their counterparts in Nepal enjoy a duty-free import from the same source.
Banerjee said the state government could lend its support to the eight state-based units by reimposing 20 per cent luxury tax on imported vanaspati.
All major states have imposed the tax, but the Bengal government has withdrawn the impost from August 2002. This has made the industry vulnerable, Banerjee said.
The tax on imported vanaspati is applicable in Jharkhand, Uttar Pradesh, Delhi, Punjab, Haryana, Rajasthan and Madhya Pradesh.
State commerce and industry minister Nirupam Sen said he would look into the matter.
Banerjee, however, said Sen was aware of the problems of the industry as he himself had recommended imposition of 20 per cent tax on imported vanaspati.
The immediate reason for the industry’s decision to down shutters was the fear of flooding the eastern market by Nepalese vanaspati in the remaining months of the current financial year.
According to Dugar, State Trading Corporation, which was appointed as canalised agent for import of vanaspati from Nepal, had failed to get into business in April-October.
In November, the corporation had started issuing no-objection certificates to private importers who are mostly based in the eastern region.
The association has demanded that in the short run, State Trading Corporation should import the vanaspati by itself and distribute in all the states according to the consumption pattern notified by the food ministry to avoid flooding the eastern market with the cheaper product.