The Hindu Business Line : ‘Increase output of domestic edible oil’

Mumbai, March 27 The New Delhi-based Central Organisation for Oilseeds and Oils Trade and Industry has expressed disappointment at the recently announced sharp cut in customs duty on edible oils.

The trade body believes current edible oil prices are realistic and are not the primary cause of inflation.

In a representation to various ministries including the Finance Ministry, the President of the organisation, Mr Davish Jain, has argued that the benefit of lower duty will not flow to the consumers because overseas suppliers have jacked up export prices already. In addition, oilseeds growers here will be discouraged and Government revenues will fall, he has asserted.

The apex body believes the real solution to the problem of rising prices lies in increasing the domestic production so as to insulate consumers from the adverse effects of high international prices.

‘Govt had no choice’

Our Associate Editor, Mr G. Chandrashekhar, adds: The Government had no choice but to reduce the rate of customs duty. It had to send out a signal that it was taking action to control inflation. Indeed, there is a case for allowing edible oils at zero duty until prices return to levels more consumer-friendly.

High prices hurt the poor the most.

Domestic producers would be unhappy with cheaper imports as the latter cut their profit margins. In the last two years, domestic vegetable oil producers have reaped enormous profits because of rising open market prices in line with international price movements. They would hate to see a squeeze in such profits.

Raise production

Admittedly, tariff and trade policy changes, by their very nature, are temporary measures to tide over current difficulties. A long-term solution would be to raise indigenous production.

The apex body for the oils trade and industry would serve the cause of trade and industry better if it clearly spelt out a strategy for raising indigenous production and the role industry and trade can play in raise raw material output.

A myth floated in this country for long years is that high prices of edible oils will automatically translate to higher oilseeds production. The ground reality is different. The ability of an average Indian farmer to produce more (because of high prices) is rather limited.

COOIT may also examine how best to insulate the vast multitudes of poor consumers from high prices. The per capita consumption of this vulnerable section is low. There is need to deliver calories at affordable prices.

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