Bhutan Vanaspati floods market

After Nepal and Sri Lanka, it’s now Bhutan’s turn to eat into the domestic vanaspati retail market, pushing local vanaspati producers to the brink.

Vanaspati has figured on Bhutan’s list of top exported items after power and copper. The country has exported vanaspati worth Nu 1.38billion (Rs 140 crore) in 2006, as evident from Bhutan’s international trade figures.

Vanaspati, a major hydrogenated form of palm oil, is a popular cooking medium. But several international trade treaties and import duty structures have put domestic manufacturers in deep trouble.

Nepal is the biggest overseas entrant in the vanaspati market here and officially exports over 70,000 million tonne of the product annually. This does not include supplies through the grey market, which could be double the official exports.

On one hand, imports of palm oil, the main raw material for vanaspati, is duty-free in Nepal. On the other hand, exports of it to India - up to 1 lakh million tonne per annum - is export duty-free.

“This makes Nepalese vanaspati much cheaper in India. Starting from Uttar Pradesh to Darjeeling - along the entire Indo-Nepal border - it is hard to find any place not invaded by Nepal’s brands of vanaspatis,” said senior members of the Indian Vanaspati Producers Association.

Imports of Sri Lankan vanaspati is also duty-free and manufacturers there too enjoy a favourable duty structure, making their brands cheaper at around Rs 10 per kg in India. Nearly 2 lakh million tonne of Lankan vanaspati comes to India per annum Economic Times.