7/15/04 (Oilmandi) India - The edible oil processing industry is feelingleft out due to the government’s apathy.

If the central government can give tax sops to vegetables and fruitsprocessing industries producing tomato ketchup, potato chips and fruitjuices, which are normally used by the well-to-do sections of the society,why are vegetable oil processing units producing refined edible oils andvanaspati, which are essential items of daily use even for the poorsections of the society, not being given a similar tax treatment? asked ARSharma, president, Solvent Extractors’ Association of Punjab.

To promote this important segment of agro-processing industries, theindustrial associations had demanded complete exemption from excise on theproducts of these industries, he said.

Some years back, the central government had exempted all the productsproduced by the fruits and vegetables processing industries from exciseduty. Now, the Union Budget for ’04-05 has granted an income tax holidayfor five years to new industries in the field of vegetable and fruitprocessing.

India is facing an acute shortage of edible oils. Edible oils accountedfor more than 70% of India’s total farm imports during ’03-04. The countryspent $2,344.7m on buying cooking oil, 30% more than its bill in ’02.

Solvent extractors wonder why this important sector of the agro processingindustry is being given a step-motherly treatment by the state governmentsand the Centre. Besides the 15-20% state taxes and levies, there is anexcise duty of Rs 1 per kg on refined edible oils and vanaspati, and a 16%excise on by-products such as gums, waxes and fatty acids produced by thevegetable oil processing industries.

Mr Sharma regretted the recent Budget’s failure to address this issue. Hetold ET, If the government continues to ignore this sector of theagro-processing industries, the day is not very far when we shall be70-80% dependant upon imports for edible oil requirement and our consumersmay be blackmailed by the foreign suppliers in the same way as ishappening in the case of petroleum products.

Japan started producing and consuming rice bran oil, popularly known as ‘Heart Oil’ there because of its cholesterol balancing properties, as acooking medium 50 years ago. In India, this concept is still in the infantstages.

Unfortunately, the present excise duty structure discourages the effortsof the industry in this direction, Mr Sharma said. There is a 16% exciseduty on the by-products of the rice bran oil refining industry. The lastBudget also levied a Rs 1 per kg excise on the refined rice bran oil.

There is absolutely no justification for discouraging value-addition inthis important sector by imposing heavy taxes, particularly when thisconcept is in its infancy in India.

At a time when there is a move to do away with the MSP regime, productionof value-added products from the derivatives of paddy can ensure betterprice realisation to the paddy growers and can make rice price competitivein the international market.