Ajay Tandon, president of the Solvent Extractors Association of India (SEA), pleaded union finance minister Yashwant Sinha to allow import of oilseed and oil-bearing materials under OGL till the nation reaches self-sufficiency in oilseeds production, to overcome the raw materials shortage and provide a level playing field to domestic industry as its finished products - vegetable oil - is freely importable but its raw materials - oilseeds and oil bearing materials - are not freely importable.
Oilseed import will not hurt the growers as the same will only partly replace the vegetable oil imports.
In a pre-budget memorandum submitted to the finance minister, Tandon appealed to encourage the exploitation of non-traditional sources of vegetable oils like rice bran, minor oilseeds of trees and forest origin, cottonseed and oilcakes, etc to reduce dependence on imported vegetable oils.
Tandon said that in the last three years, excessive import of vegetable oils to tide over the gap between demand and supply has adversely affected the domestic crushing industry and farmers alike.
This has led to stagnancy in oilseed production. Therefore, it is necessary to regulate import of vegetable oils through variable custom tariff or through some other mechanism depending on the local demand, supply and price situation, Tandon further said.
He also urged to institute price spikes as recommended in the World Bank report.
As long as import of edible oil is necessary, import of crude edible oil should be preferred to refined vegetable oils by imposing higher import duty on the latter to encourage the domestic refining industry.
Tandon urged the reintroduction of the money credit scheme for usage of solvent extracted minor oils in the manufacture of soap; and to restore excise duty exemption for soap stock, acid oils, spent nickel catalyst and by product oxygen gas. He also urged that tax structure on oilseeds derivatives be rationalised.
The solvent extraction industry, consisting of 600 solvent extraction plants having overall processing capacity of 30 million tonne, processing oilseeds, oilcakes and rice bran is operating now at about 33 per cent only. Industry recovers over 1.5 million tonne of vegetable oils and produces over 11 million tonne of oilmeals per annum.
He revealed that solvent extraction industry is passing through a crisis due to acute shortage of raw materials (oilseeds), and the depressed international markets for oilmeals have caused a drastic fall in export earnings in current year. It shall also fall short of the commerce ministrys export target of $900 million.
He added that this industry is exporting over 4.3 million tonne of oilmeals earning foreign of over Rs 3,000 crore per annum.
