Indian traders were routing edible oils produced in Malaysia and Indonesia through SAARC countries to evade import duties in India.
SEA & Indian edible industrialists demanded that duty-free imports from eight-member countries of SAARC (South Asian Association for Regional Cooperation) be restricted to commodities produced in the member countries only so that domestic industry of edible oil remains competitive. This year, to encourage farmers to produce more oilseed, and consequently reduce our import dependency of edible oils, Govt. have increased duty on its imports significantly. But at the ground level, its desired effects are not seen.
This is mainly because these imported edible oils have now started coming to India via South Asian countries like Nepal, Sri Lanka and Bangladesh from which import duty is still zero per cent. India, the largest importer of edible oils in the world, allows duty-free imports of edible oils from SAARC member countries like Afghanistan, Bangladesh, Pakistan, Bhutan, Nepal, Maldives and Sri Lanka and importers had started routing Malaysian and Indonesian palm oil through SAARC countries to evade high import tariffs.
To avoid duty evasion and protect domestic edible oil industry, India should allow imports of edible oils from SAARC members only if they are produced there. “The zero-import-duty benefits to the SAARC countries should be given only on the commodities produced in these countries. If such a policy is not framed, then the motto of the government to encourage domestic produces will not be fulfilled in totality.