Edible oil trade has reiterated its demand for imposition of a 10 per cent import duty on crude oil as well as raising the duty on refined oil to 17.5 per cent, Ashok Sethia, president, Solvent Extractors’ Association of India (SEA) said on Tuesday.
“We requested the ministry to make changes in the import duty structure and the tariff value to protect the industry from excessive import of edible oils,” said Sethia.
Currently, there is no duty on import of crude edible oils in the country, while refined edible oils attract an import duty of 7.5 per cent.
Representatives from SEA, the Central Organisation for Oil Industry and Trade (COOIT) and the Soybean Processors Association of India (Sopa) met agriculture ministry officials on Tuesday to discuss oilseed output in the country, ahead of the kharif sowing season. There are fears that the area under soybean—the main kharif oilseed—may drop substantially this year on the back of falling prices and large carryover stocks, pulling output way below last year’s level of around 10 million tonnes. According to trade officials, the country has four million tonnes of soybean stock lying due to poor crushing. Thin demand pulled down the wholesale price of soybean to an average of Rs 1,931.80 per 100 kg in April as against Rs 2,548.75 a year -ago.
Prices of almost all oilseeds have been declining since 2008-09 owing to cheap edible oil imports, said P K Sardar, executive director, COOIT.
The Ministry of Agriculture has pegged the country’s edible oil demand at 13.8 million tonnes, while the Ministry of Food and Consumer Affairs pegged the domestic availability and import projections of edible oil for the near future at 17.8 million tonnes.
In the face of high imports and low prices, domestic crushing of oilseeds was poor, and this was likely to divert oilseed farmers to other remunerative crops in kharif 2010, said Sardar.
He said industry representatives also requested for increase in tariff value, which had not been revised since September 2006. “Tariff value of imports should be revised every quarter, in tandem with international oil prices. Also tariff value should be imposed on import of some oils like sunflower,” he said.
Tariff value or base import price is the rate at which the government imposes custom duty on edible oil import, irrespective of the contracted price.
The government has kept the base import price of palm oil and soyoil unchanged for nearly four years now to keep domestic prices in check. The base import price of palm oil was last changed on July 31, 2006, and that of soyoil on Sep 15, 2006.
Trade officials say that with the price of refined edible oils in global markets almost doubling since 2006, the effective rate of duty on refined oils worked out to around four per cent. This had tilted the balance of trade in favour of refined edible oil import, thereby hitting local refiners.
“The officials did not reject our recommendations, they will examine our views and then forward the proposal to the Ministry of Finance to take a decision on the duty structure,” said Sardar.
Palm oils constituted around 77 per cent of the total edible oil imports in November-April, down from 82 per cent a year ago, while the share of soft oils in the same period grew to 23 per cent from 18 per cent.
