Govt likely to cut edible oil import

Responding to industry concerns that imports of cheap vegetable oils were rising, the minister said the government had reduced the import duty to 16.5 per cent from 25% as edible oil prices were rising in the domestic markets.

Government officials said the deficit between India’s domestic edible oils production and demand was likely to remain for some years. As a result, the country will have to depend on imported oils as domestic oilseeds production was stagnant. Industry officials say edible oil domestic demand during 1998/99 (November-October) was estimated at 8.2 million tonnes compared with an output of 6.8 million tonnes. Indian oilseedsproductivity is currently between 800 to 1,000 kg per hectare which is half the world average and one-third of the productivity in advanced countries, officials said.

"The gap in domestic availability and the demand in edible oil is likely to continue for some time and the demand would grow," said R P Sinha, secretary in the food ministry’s department of sugar and edible oils. Food Ministry officials said the government was taking steps to boost productivity by giving incentives.

"Efforts are being made to grow oil palm in Andhra Pradesh, Karnataka and Tamil Nadu in addition to Kerala and Andaman and Nicobar islands," Sinha said. Trade officials said the potentials of traditional oils such as ricebran and cottonseed oils must also be exploited.

Government officials said one of the problems leading to stagnant oilseeds production was that 75 per cent of the country’s oilseeds were grown in rainfed area. "There is also a problem of ensuring adequate availability of high yielding variety of oilseeds intime," Sinha said.

Trade officials urged the government to immediately start futures trading in oilseeds which would ensure price stability, to which Sompal gave a positive reply. "I am in favour of starting futures trading," Sompal said. "It will enhance the spectrum of the market." Meanwhile, India’s oilseeds trade on Saturday urged the government to impose a higher import duty on edible oils during the peak domestic harvest season to help farmers get better prices for their produce. Trade officials said surging edible oil imports because of low global prices had depressed domestic prices to 1991 levels, and as a result, could prompt farmers to shift to other crops.

"What we can have is a variable duty structure," Govindbhai Patel, president of the Central Organisation for Oil Industry and Trade (COOIT), told reporters. "We can have a higher duty during the peak season when the domestic arrivals are in full swing and a lower duty during the lean season when domestic arrivals slow down," he added. Indiacurrently levies an edible oil import duty of 16.5% COOIT is holding a two-day oilseeds seminar in New Delhi where the summer oilseeds crop estimates will be finalised. Trade officials said the government should also encourage imports of oilseeds, rather than edible oil, as it would help utilise idle crushing capacity, estimated as high as 60 per cent.

Industry said the government’s decision to allow import of certain oilseeds at a duty of 40 per cent had made it "practically impossible" to import the commodity. "We are in a peculiar position where we are allowed to import finished products at a lower duty and raw materials at a higher duty," Patel said.

Industry officials said depressed global prices were fuelling imports which had affected Indian prices and exacerbated the problem of stagnant domestic oilseeds production.

R P Sinha, sugar and edible oils secretary, said India’s edible oil imports in 1998/99 (November-October) were expected to be two million tonnes, on a par with last year. He saiddomestic demand for edible oil during 1998/99 was estimated at 8.2 million tonnes compared with output of 6.8 million.

"From all available indications, we can safely assume that edible oil supply from indigenous sources is going to be higher than last year," Patel said. "We have a shortfall. But imports will be much more than the deficit."