Decision to freeze import duty on edible oil will impact goal of achieving ‘Aatma Nirbharta’: Solvent extractors
Depressed domestic oilseed prices due to cheaper imports will discourage farmers from expanding the area under oilseeds, said Ajay Jhunjhunwala, President of the SEA
23/01/2024 (The Hindu Business Line) - The Solvent Extractors’ Association of India (SEA) has said the nation could move further away from achieving the objective of ‘Aatma Nirbharta’ in edible oils, following its decision to freeze import duties.
In his monthly letter to members of the association, Ajay Jhunjhunwala, President of the SEA, said the Centre, through the Finance Ministry, has notified that the effective duty on crude and refined palm oil, soya oil, sunflower oils and RBD palmolein, will be unchanged from the present applicable duties as of March 31, 2025.
While the government aims to maintain price stability in the longer term, this will hurt the sentiments of Indian oilseed farmers, he said, adding: “Depressed domestic oilseed prices due to cheaper imports, will effectively discourage farmers from expanding the area under oilseeds; therefore, the nation could be moving further away from achieving the objective of ‘Aatma Nirbharta’ in edible oils.”
(The government reduced the import duty on refined soyabean and sunflower oil from 17.5 per cent to 12.5 per cent through a notification in June 2023. Now, the effective import duty, including cess, for refined oils is 13.75 per cent. The major crude edible oils attract 5 per cent import duty, and the effective duty is 5.5 per cent after including cess.
In a separate notification this month, the Finance Ministry said the existing duty rates on import of crude and refined edible oils has been extended till March 31, 2025. (It was to end on March 31, 2024.)
Drop in imports
He said import of edible oils, both crude and refined, has decreased during each of the last two months of the current oil year 2023-24, compared to the year before. It is around 24.5 lakh tonnes (lt) for November-December of 2023-24, compared to around 30.8 lt during the same period a year before. “This will definitely give an impetus for the use of domestic oils in the coming months and thus help local oil producers,” he said.
Referring to the recent letter of the Director of the Department of Vegetable Oils and Sugar, under the Ministry of Consumer Affairs, where it had said maximum retail prices (MRP) on major oils such as soya, sunflower and palm have not been reduced to the extent of the decrease in international prices, Jhunjhunwala said: “I request all members who are manufacturers of branded oils to take note of the same and reduce prices in line with the fall in international prices.”
Rabi sowing
On rabi sowing, he said the area under rape-mustard, as estimated on January 12, is over 99.5 lakh hectares (lh), slightly higher than 97.2 lh at around the same time last year, and far above the five-year average of 73.06 lh.
“With climatic conditions being around normal, we could expect a good harvest of rape-mustard seed of over 13 million tonnes to meet the domestic requirement of edible oils, he said.
With the area sown under overall rabi oilseeds is higher than last year, India could expect a larger rabi oilseeds crop this season, he said.