While the government tried to synchronise the duty structure of by-products of edible oil refining with imported products, it is the domestic edible oil refineries that will be hit.
The finance minister has announced removal of basic customs duty on de-oiled rice bran oil cake and imposition of 10 per cent export duty on the same. Crude palm stearin has also been exempted from basic customs duty when imported for use in manufacturing of laundry soap.
“Both these are by-products of edible oil refining. Since zero duty imports have been allowed, refineries’ margins will be hit as they will fetch lower price of these by-products when they sell them,” said spokesperson of the Solvent Extractors’ Association (SEA).
Soapmakers will, however, cheer the move of duty-free imports of crude palm stearin, though this relief will be available to only those who import this on actual user condition.
Rice bran oil cake exports have proved to be a good business off late and most of it is exported to Vietnam. Duty would take a hit on these exports. However, these measures of exempting customs duty and imposition of exports duty would result in reduced price of the de-oiled rice bran oil cake which is important animal feed. The logic for the move is to reduce cost for farmers and milk producers which has been a pressure point on food inflation.
Dinesh Shahra, Managing Director, Ruchi Soya Industries Limited, a major player in edible oil sector said, ”We would have liked to see some time-bound steps on reviving the crippling oilseed crushing business.” However he added, “Widening the differential in customs duty between crude palm oil and refined olien imports would benefit the domestic industry immensely.”
However, in terms of improving availability of edible oil and give more business of crushing units in the country by reducing imports, the finance minister has announced that Rs 300 crore are being provided for oil palm plantation which can bring in 60,000 hectares under cultivation.
The initiative will yield about 300,000 tonnes of palm oil annually in five years. Balram Yadav, Managing Director, Godrej Agrovet Ltd, said, “This will help reduce India’s dependence on imported edible oil. However, this funding should flow directly to farmers, at Rs 50,000 per hectare, and hope support for the oil palm sector continues in future Budgets.” SEA spokesperson said: Palm farming should be given status of plantation to attract corporate investment for oil palm farming.
