)
India’s import of refined edible oil (refined, bleached and diodised or RBD oil, formally) is at a five-year low in the year beginning November 2014.
Data compiled by the apex industry body, the Solvent Extractors’ Association (SEA), says refined oil import declined 63 per cent to 303,066 tonnes between November 2014 and March 2015, compared to 817,615 tonnes in the corresponding period a year before. That pushed the share of refined oil in the overall vegetable oil import basket to six per cent in the first five months of the current oil year, as against 19 per cent in the same period a year before.
“There is a narrowing of price differential with crude palm oil (CPO). From October 2014 onwards, the governments of Malaysia and Indonesia, the world’s two largest producers (of CPO), introduced zero duty exports. Today, import of CPO is cheap compared to RBD,” said B V Mehta, executive director, SEA.
Indian refiners were importing CPO at $10 a tonne less than RBD. With export duty nil, the price of RBD went up by $20.
“The government should immediately raise the import duty on both RBD and CPO, to let prices of edible oil slightly move up. If the edible oil price remains subdued, domestic seed crushers and refiners would be unable to use domestic seeds due to (financial viability issues),” said a senior official with one of the largest vegetable oil refiners.
In December 2014, the central government had raised the tax on CPO to 7.5 per cent from 2.5 per cent and that on refined grades to 15 per cent from 10 per cent. Farmers and stockists are estimated to have unsold soybean stock of around 1.5 million tonnes, about 15 per cent of total output, due to a weak price. This might prompt farmers to opt for more remunerative crops this kharif season.
Interestingly, the gross redemptions in FY16 were just Rs 2,000 crore less than that see in FY08 amid a meltdown in the market due to the global financial crisis.
