High taxes hit vegetable oil producers

High taxes on the production of vegetable oil are taking a toll on the industry which has a strong base in the Saurashtra region.

Prices of vegetable oil in the retail market are almost at par with groundnut oil prices, which were earlier higher than the prices of the former. This has also affected the sales of vegetable oils.

"The state government has imposed several taxes on vegetable oil production which has made life miserable for vegetable oil manufacturing units in Saurashtra," said a mill owner.

"At present a ground nut oil tin costs around Rs 780-800 which is the same as that of a vegetable oil tin," he said.

The Centre has imposed an excise duty of Rs 1,250 per mt on vegetable oil in the last Budget, while the state government has imposed a four per cent sales tax on vegetable oil.

Chandrakant Patel of Morbi Vegetables Products said that the imposition of custom duty and various state government and central government taxes have raised the prices of vegetable oil.

This has also forced producers to sell vegetable oil with discounts as the prices of ground nut oil are also at the same levels.

"The government had increased the tax on tinned vegetable oil four times in the last month, which has resulted in a price hike of Rs 150. If the government continue with its present tax policy, many vegetable oil production units in the state will soon close down," said Patel.

The production of vegetable oil in Nepal is cheaper than that of India because Nepal imports palmoil from Malaysia tax-free. In India, a custom duty of Rs 16 per kg is charged on the imports of palmoil.

"The number of vegetable oil manufacturing units in Gujarat has slipped to three from 13 units two years back. With the present government policy, the future of these units are also in doubt," he added.

The Saurashtra Vegetable Oil Producers' Association has recently submitted a memorandum to the state government to reconsider the tax hikes. The association is also planning to approach the Central government through a delegation in New Delhi during this month.