The government is caught in a problematic situation in balancing interests of consumers with welfare of farmers who would like more protection by way of increased import duty but any such move may raise the risk of retail inflation, industry body ASSOCHAM said on Thursday.
It said India's import bill on account of vegetable oils is going to increase to $14 billion in the current financial year, against $10 billion in 2014-15.
"Due to weak global prices and glut in the international markets, prices in India have remained subdued despite a severe shortage of domestic production. For September, the CPI (consumer price index) marked annualized increase of only 3.6 percent in the Oils and Fats segment.
"The situation in edible oil imports is somewhat similar to the crude auto oil. However, unlike the auto fuel segment, the subdued prices have hit interest of farmers, while consumers have benefitted," the industry body said in a statement.
So far the government has raised the customs duty on crude and refined edible oils to 12.5 percent and 20 percent respectively. While there is a demand for more such protection for the farmers, the move may lead to spiral in consumer inflation, which the government can ill-afford, learning from the pulses experience.
In the case of pulses, the supply-demand situation at the global level was equally bad in sync with the Indian production which has fallen owing to deficient rains.
Edible oilseed production has been declining from 32.7 million in 2013-14 to 26 million tonnes in 2014-15.
