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June 28, 2006 (LBO) – India has asked Sri Lankan vanaspati manufacturers to begin exports of the vegetable oil under new controls, amidst trade talks between the countries in Colombo. The move is one that violates the spirit of the free trade agreement between the countries, Sri Lanka™s Department of Commerce says and will take up the issue at another round of trade talks being held here.

Both sides are meeting for talks on a Comprehensive Economic Partnership Agreement (CEPA) to liberalise trade in services, though Vanaspati is high on the agenda.

Local vanaspati manufacturers say they will not respond to the notice until the end of talks on June 29, allowing it to be thrashed out at trade level.

India is currently Sri Lanka's third largest export market, with just under two billion dollars in bilateral trade.

Exports of the vegetable oil came to a standstill earlier this month, after India slapped further restrictions on duty free exports from Sri Lanka.

On Monday, Indian government owned body, the National Agricultural and Marketing Federation (NAFED) specified new import levels of Vanaspati from Sri Lanka.

For July exports, Vanaspati has been limite