India’s refined edible oil imports in the current oil year that ends in October might spurt as domestic traders were able to source it competitively compared with crude edible oil, Satnarain Agarwal, chairman of the Central Organisation for Oil Industry and Trade (COOIT) said.
Last year, India had imported 1.2 million tonne of refined edible oils, mainly refined bleached and deodorised palmolein, 6.9 million tonne crude edible oil, and 460,000 tonne of non-edible oils.
The share of refined oils was nearly 15 per cent of total edible oil import of 8.1 million tonne.
“In the current oil year, refined oil import could increase to 3 million tonne, or over 30 per cent of total edible oil imports, if the base import price remains unchanged,” Agarwal said.
The government has kept the base import price for edible oils unchanged for nearly four years now to control price rise.
In 2008, the government had also scrapped import duty on crude edible oils, and lowered the duty on refined edible oils to 7.5 per cent from 27.5 per cent to ensure edible oil prices remain stable.
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Agarwal said the move was now tilting the balance in favour of refined edible oil imports.
He said the 7.5 per cent import duty on RBD palmolein was calculated at the 2006 base import price of $484 a tonne. Since the landed cost of imported RBD palmolein has shot up to $835-850 a tonne, the effective duty works out to only about 4 per cent.
Imported RBD palmolein now costs around Rs 40,400 a tonne at Mumbai port after taxes, which is only marginally higher than the current landed cost of crude palm oil (CPO) of around Rs 37,000.
Agarwal said since the difference between imported RDB palmolein and CPO is only around Rs 3,400-3,500 a tonne, it was more competitive for many traders to directly import the refined oil and save on refining cost. He said the narrowing difference between the cost of refined and crude edible oils had started having a negative impact on the local refining industry.
He said it was a double whammy for the local industry, as total vegetable import too was seen slightly down from last year’s over 8.6 million tonne.
“I think the country will import about 8.5-8.6 million tonne vegetable oils this year, as there were excessive imports last year and that has left a large surplus,” he said.
COOIT’s vegetable oil import estimate for the current oil year is much lower than that of the other oil trade body—Solvent Extractors’ Association, which has pegged 2009-10 vegetable oil imports at 9.5 million tonne, up 10 per cent on year on rising consumption, lower domestic crushing, weak international prices and continuation of duty-free edible oil import regime.
Agarwal said Indian traders had imported excess quantities last year, and around 0.8-1.0 million tonne of that quantity was still lying at ports.
Moreover, farmers still have stock of around 2.5-3 million tonne soybean, which will come to the market this year for processing.
Coupled with the estimated output of mustard at 5.8-6 million tonne in 2009-10, would add to the local edible oil supply and ensure lower imports, he said.
Additionally, the estimated output of mustard at 5.8-6 million tonne in 2009-10 (July-June) will add to the local edible oil supply and ensure lower imports, he said.