Govt expresses concern over massive edible oil import

This massive imports of edible oil has already sent the domestic industry in a tailspin. The total capacity utilisation now stands at barely 33 per cent. This effect has consequently affected the oilseed growers also. The market prices of sunflowers and soyabean has fallen much below the minimum support prices, and farmers are resorting to massive distress sales. Nafed has yet to enter in for market intervention operation. The industry representatives who met the minister shortly has suggested that the only possible way to wriggle out of the situation is to initiate rapid policy changes on the eve of the ensuing 1999-2000 which began in November.

According to the executive director of the Central Organisatin for Oil Industry and Trade (COOIT), KML Chhabra, government should immediately raise the basic import duty on refined edible oils to 25 per cent from the existing level of 15 per cent.

The basic import duty on crude edible oils should be lowered from the existing level of 16.5 per cent to 15 per cent as this will facilitate more imports of crude edible oils as against imports of refined edible oils. The increased imports of crude edible oils will, therefore, give an opportunity to the domestic industry to utilise their capacity by further processing.

Chhabra has also suggested that the basic import duty on oilseeds should also be lowered from the existing level of 40 per cent to 5 per cent. More imports of oilsseeds will also facilitate the industry to increase their capacity utilisation. He stated that oilseed growers will not be affected by this decision as the government will retain the powers to ensure that the landed cost of imported oilseeds will be higher than the domestic market prices of oilseeds. If the landed cost of imported oilseeds tends to be lower than the domestic market prices of oilseeds, then the import duty on oilseed should be adequately raised.

He did not foresee any quarantine problem involved in imports of oilseeds. He said that the government has already judged this issue before putting imports of oilseeds under OGL. It is now a problem of lowering tariff duty, he said.

Executive director of Indian Vanaspati Producers’ Association (IVPA) IR Mehra said that the government should immediately review the Indo-Nepal treaty and place imports of vanaspati from that country under negative lit as mentioned in the clauses of the said treaty. Under the existing protocol of the treaty about 50,000 tonne of duty free vanaspati are pouring into the country every month. As a result this has affected the vanaspati industry in the entire eastern region.

Comparatively, the chief executive director of Vanaspati Manufacturers Association of India (VMI), SK Chaddha said that he did not foresee much possibilities of imports of refined edible oils being reduced if the basic duty is raised to 25 per cent. This will only result in imported edible oils being costlier by Rs 2 per kg. The basic import duty should be raised to 80 per cent and the difference of import duty on refined edible oil and crude edible oil hould be at least 15 per cent.