March 26, 2008 (LBO) – Sri Lanka based makers of vanaspati ghee or hydrogenated vegetable oil who exported to India under a free trade deal said they faced closure after India slashed duty on imported vegetable oils. . India dropped import duty on palm oil on March 20 in a bid to check rising domestic prices, making Sri Lankan manufactured palm oil based vanaspati no longer competitive, manufacturers said in a statement Wednesday.
“The 14 companies manufacturing and exporting to India under the Indo-Sri Lanka free trade agreement will be compelled to close the factories temporarily until alternative avenues are found for export to other countries,” the Vanaspati Manufacturers Association said in a statement.
“The last nail was driven into the coffin for export of vanaspati bakery shortening and margarine to India under the Indo-Lanka Free Trade Agreement by the Customs notification reducing the Indian import duty on crude palm oil and crude palm olein from 45 percent to 20 percent.”
Exporters were already struggling with excess capacity after India slapped quotas on vanaspati shipments last year.
This was after Indian vanaspathi makers protested that Sri Lanka based firms were engaging in import du