Govt bans edible oil exports

The decision, however, will not impact domestic prices.

The government has banned exports of edible oils for a year to check their rising domestic prices and control inflation. The ban will be in place till March 16 next year.

In the past, the government had banned exports of sugar, wheat, pulses and skimmed milk powder in an effort to control inflation. It has also regulated rice and onion exports.

Edible oil has a higher weightage of 2.76 per cent in the Wholesale Price Index, as compared with cement's 1.73 per cent, wheat's 1.38 per cent and 2.45 per cent for rice.

In a notification dated March 17, the Directorate General of Foreign Trade said the ban would also cover deals under the transitional arrangements.

This implies exporters, who had received letters of credit for export on or before March 17, (when the ban came into effect) will not be allowed to honour their commitments.

"The ban will not have a major impact on edible oil prices as exports constitute a small per cent of the entire trade. There was no point in banning exports of groundnut oil which has high export realisation. The industry could have substituted such exports by importing higher quantities of soya oil or palm oil from the export earnings," said Davish Jain, chairman, Central Organisation for Oil Industry and Trade.

The country exported just 11,639 tonnes of edible oil in 2006-07. Groundnut oil, mustard oil and coconut oil are primarily exported.

"The ban will have a psychological impact on the market but international price remains the concern. The market prices have fallen on Tuesday but it is not as a consequence of this notification. Domestic prices will follow suit only if international prices decline further," said D P Khandelia, managing director, Khandelia Oils.

The country meets about 45 per cent of its edible oil requirement through imports. The second advance estimates, released by the agriculture ministry last month, puts this year's rabi oilseed production at 9.59 million tonnes, down 6.7 per cent over last year.