The Hindu Business Line : Vanaspati industry wants zero-duty on vegoil to stay

The Vanaspati Consultative Committee, an apex body, jointly floated by the Indian Vanaspati Producers Association (IVPA) and the Vanaspati Manufacturers Association of India (VMA), has made a strong pitch for maintaining status quo on vegetable oil import duty in the forthcoming Union Budget.

In a memorandum to the Ministries of Agriculture, Commerce and Finance, the apex body has argued that there should be no change in the import duty and tariff value for crude palm oil and palm kernel oil.

Maintaining zero-duty on import duty would ensure that basic edible oils, vanaspati and food products would be available to consumers at reasonable prices; and force the liquidation of huge stocks that have been imported which in turn will enhance availability and contain prices, the industry body has argued.

It is well known that Indian importers have brought in nearly 54 lakh tonnes of various edible oils between November 2008 and June 2009, representing an increase of nearly 20 lakh tonnes over the previous year. Certainly, domestic consumption has not increased to such an extent.

Import duty

There is a suspicion that a large part of the excessive import has been made with speculative intent. Importers with huge inventory have been pressuring the Government since early this year for imposing import duty which would immediately push domestic prices up and bring windfall profits to importers.

The Government has so far not succumbed to the pressure, realising that there was no justification for the fiscal impost when cooking oil prices were high and oilseed market was ruling considerably above the minimum support price.

“It is the last ditch attempt by speculators to influence the Government,” commented an industry representative who did not wish to be identified.

Indeed, such speculators are now under pressure because huge funds are tied up in such inventory and offtake in the domestic market is slow due to seasonal factors.

On the other hand, prices of major vegoils - palm oil and soyabean oil – are still high. A weak rupee makes imported vegoils more expensive. There is belief, the Finance Minister will not be swayed by revenue considerations, said a trader.

A major challenge for the new Government is to contain high food prices. An aberrant monsoon has created an additional risk to kharif production of major oilseeds such as groundnut and soyabean.

The food price situation, especially of grains, sugar and edible oils, is potentially explosive. It would be unwise to tinker with the zero-tariff structure for vegetable oils.

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‘Vanaspati yielding ground to refined oils’

More Stories on : Oilseeds & Edible Oil | Budget

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