MARKET DEVELOPMENT
India's Vegetable Oil Industry Wants Government To Raise Import Duty
India's Vegetable Oil Industry Wants Government To Raise Import Duty
10/10/2014 (Bernama) - India's vegetable oil industry has urged the government to increase the import duty on crude vegetable oils to 10 per cent from 2.5 per cent now and on refined vegetable oils to 25 per cent from 10 per cent to safeguard the interests of farmers.
Edible oil prices are currently at a historical low since 2008.
Local prices are also at a level where Indian oilseed-growing farmers will be in distress with a Kharif crop (plants sown in monsoon season) harvest expected in the next four to five weeks, the Solvent Extractors' Association of India (SEA) said in a memorandum it sent to the government.
Further, the Indian vegetable oil industry has been suffering for the last three years due to the minimal duty difference of 7.5 per cent between crude and refined oil and the inverted duty structure by Indonesia and Malaysia, the association for the vegetable oil industry and trade claimed.
The higher duty on crude palm oil and lower duty on refined olein has given an added advantage to refined palm oil exports from these countries, it said.
The capacity utilisation of the domestic vegetable oil refining industry has been reduced to 35 to 40 per cent against 65 to 70 per cent in the past, it added.
"As a remedy for the current situation we would like to suggest to the government to increase the import duty on crude vegetable oils from 2.5 per cent to 10 per cent and refined vegetable oils from 10 per cent to 25 per cent.
"This will safeguard the interests of farmers by ensuring remunerative prices for their produce in the coming kharif harvest season," it said in the memorandum.
SEA said the fear of fuelling inflation due to a duty hike is unfounded as inflation is now at its lowest in five years at 3.74 per cent. Moreover, the additional revenue generated by Customs duty can be ploughed back into increasing oilseed productivity, it said.
Imports of vegetable oils in August totalled 1,330,000 tonnes, the highest in a single month since imports were allowed by India in 1994 under the Open General Licence.
The main reason cited for this is the zero export duty on palm products announced by Malaysia for two months effective from Sept 1, 2014 with an aim to reduce inventory. At the same time, the expected zero export duty by Indonesia from Oct 1, 2014 against the current duty of nine per cent may further push imports into India.
This will result in increased pressure on domestic prices in the coming months when the Kharif oilseed crop is marketed, said the association.
As a consequence of the price fall, India's imports of vegetable oils from November 2013 to August 2014 reached 9,530,000 tonnes, and looking at the shipments planned for the next two months, total imports would be over 11.5 million tonnes, up by a million tonnes from last year, valued at over Rs. 60,000 crores (US$10 billion).
Edible oil prices are currently at a historical low since 2008.
Local prices are also at a level where Indian oilseed-growing farmers will be in distress with a Kharif crop (plants sown in monsoon season) harvest expected in the next four to five weeks, the Solvent Extractors' Association of India (SEA) said in a memorandum it sent to the government.
Further, the Indian vegetable oil industry has been suffering for the last three years due to the minimal duty difference of 7.5 per cent between crude and refined oil and the inverted duty structure by Indonesia and Malaysia, the association for the vegetable oil industry and trade claimed.
The higher duty on crude palm oil and lower duty on refined olein has given an added advantage to refined palm oil exports from these countries, it said.
The capacity utilisation of the domestic vegetable oil refining industry has been reduced to 35 to 40 per cent against 65 to 70 per cent in the past, it added.
"As a remedy for the current situation we would like to suggest to the government to increase the import duty on crude vegetable oils from 2.5 per cent to 10 per cent and refined vegetable oils from 10 per cent to 25 per cent.
"This will safeguard the interests of farmers by ensuring remunerative prices for their produce in the coming kharif harvest season," it said in the memorandum.
SEA said the fear of fuelling inflation due to a duty hike is unfounded as inflation is now at its lowest in five years at 3.74 per cent. Moreover, the additional revenue generated by Customs duty can be ploughed back into increasing oilseed productivity, it said.
Imports of vegetable oils in August totalled 1,330,000 tonnes, the highest in a single month since imports were allowed by India in 1994 under the Open General Licence.
The main reason cited for this is the zero export duty on palm products announced by Malaysia for two months effective from Sept 1, 2014 with an aim to reduce inventory. At the same time, the expected zero export duty by Indonesia from Oct 1, 2014 against the current duty of nine per cent may further push imports into India.
This will result in increased pressure on domestic prices in the coming months when the Kharif oilseed crop is marketed, said the association.
As a consequence of the price fall, India's imports of vegetable oils from November 2013 to August 2014 reached 9,530,000 tonnes, and looking at the shipments planned for the next two months, total imports would be over 11.5 million tonnes, up by a million tonnes from last year, valued at over Rs. 60,000 crores (US$10 billion).