Olive oil duty cut may make industry healthy

Olive oil consumers in the country are feeling the monetary pinch even as they try to maintain a healthy heart.

Despite being categorised as one of the most favoured nations (MFN) for olive oil imports, Indian consumers have been paying 40-45 per cent customs duty, the highest in the world, as compared with other MFN countries such as China where consumers pay 10-30 per cent, Chile 3-6 per cent, Peru 12 per cent and Russia 10-15 per cent. In New Zealand, olive oil is duty free.

The effective customs duty even in the countries like Argentina, the major vegetable oil producer, has been brought down to 10-31.5 per cent. In order to bring prices down, India should rationalise custom duty on the cooking oil.

India meets its total olive oil requirement through imports from Italy and Spain. The country imported 2,300 tonnes in 2006-07 which is likely to grow up to 4,000 tonnes this year because of huge imports and lack of awareness about growing it domestically.

As these trees can be grown in the climate suitable for grapes, no special efforts are needed for growing them. Studies suggest that olive oil as a cooking medium lowers bad cholesterol and can actually increases the level of good cholesterol and high density lipoproteins in the body. The oil may prove beneficial for about 50 million people in India who suffer from heart problems.

However, due to the high rate of import duty levied on various types of olive oil, consumption of olive oil is currently restricted to high-end consumers as the average buyer finds it too expensive.

The country's edible olive oil industry has been growing a an compounded annual growth rate (CAGR) of 90 per cent and is estimated to grow at 150 per cent by 2010 if the import duty is rationalised.

Olive oil is extracted from the juice of the olive fruit, the only edible oil obtained from juice in the world.

"Lowering import duty would mean the effective price decline which would boost consumption in India," said V N Dalmia, president, Indian Olive Association.

Olive oil requires one third of common edible oil used for cooking and, surprisingly, it can be reused thrice without losing any physical and chemical properties including taste, fragrance and fats. extra virgin olive oil is sold at Rs 720 a litre, pure olive oil at Rs 645 a litre and Rs 400 a litre of olive pomace oil.

An import duty duty reduction will not only encourage consumers to use olive oil abundantly, but also will induce farmers and land owners to grow olive trees.