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Vanaspathi sparks 'oil crisis'

COCONUT INDUSTRY: The Coconut Growers' Association (CGA) urges the government not to allow flooding of the local market with Vanaspathi oil, for the purpose of protecting the coconut industry in the short to medium term, industry sources said.

With the signing of the Indo-Lanka Free Trade Agreement (FTA) many Indian companies came to Sri Lanka and invested in Vanaspathi palm oil factories, which is a by product for the bakery industry.

However, due to manifold reasons India took a policy decision to stop buying Vanaspathi oil from Sri Lanka. Therefore Vanaspathi oil manufacturers are now eyeing the local market and sought Cabinet approval to do so, CGA-President Nimal Samarakkody told the Daily News.

Apparently, the Ministry of Industries is not in favour of the move.

He said that under the Indo-Lanka FTA all items have to be traded in a form of value addition up to at least 35 per cent and above. The raw material for Vanaspathi is Palm oil, which is imported from Malaysia.

This industry would eat into the entire coconut industry especially the coconut oil industry, the association says and requests the Government not to allow flooding of the local market.

Samarakkody also said the coconut industry, was in a crisis situation due to over dependence on the desiccated coconut industry, which needs to be diversified into other coconut industry related sectors like in Philippines.

Further, removal of VAT on copra needs to be expedited to jumpstart the coconut oil industry which is going through a lull due to Vanaspathi oil products.

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