Agri Business

Centre may cut import duty on oilseeds

MR Subramani Chennai | Updated on February 19, 2015 Published on February 19, 2015

the last oil season ended in October, 11.6 million tonnes of vegetable oils valued at Rs 60,000 crore were imported

Plans it as part of Make in India programme; growers' interests could also be protected





The Centre is considering reducing the Customs duty on oilseeds import as part of its “Make in India” programme. The duty could be cut in the Budget if the Finance Ministry decides to bite the bullet.

“Serious thought is being given to reducing import duty on oilseeds. But, whether the Government will opt for it or not, we will have to wait and watch,” said an edible oil industry source.

Currently, import of oilseeds attracts 30 per cent duty besides 4 per cent special additional duty. The total thus works out to 35.2 per cent which is unviable for any oil mill to import and manufacture oil.

Oilseeds import is also subject to quarantine conditions.

Though some 1,000-2,000 tonnes of safflower were imported from Australia a few months ago, no bulk shipment has taken place in recent times in view of the prohibitive duty structure.

Inverted duty structure

To promote its “Make in India” programme, the Government is also considering an inverted duty structure wherein the import duty on raw materials will be lower than on finished goods.

Going by this, there are chances of a cut in oilseeds import duty, sources said.

While the duty on oilseeds import is 30 per cent, it is 7.5 per cent for crude oils and 15 per cent for refined oils.

The fact that the Prime Minister’s office has sought the industry’s views on reducing the import duty shows to prove the importance the Government attaches to this issue, sources said.

Farm panel views

The Ministry of Agriculture is in favour of oilseeds import with the Commission for Agricultural Costs and Prices (CACP) recommending it last year itself. Sharad Pawar, the agriculture minister in the United Progressive Alliance Government, had concurred with the CACP’s recommendations.

When contacted, BV Mehta, Executive Director of Solvent Extractors’ Association of India, said the industry body had favoured imports but wanted the Government to ensure a few things to protect farmers’ interest.

“We have told the Government to ensure three things. One, importof oilseeds should be allowed only during the lean period of April-September.

Two, no permission should be given for building additional refining capacity in the country.

Three, the landed cost of oilseeds should be above the minimum support price of the concerned commodity,” said Mehta.

Arrivals of oilseeds dry up after the rabi crops (rapeseed/mustard and groundnut) are harvested in March-April.

There is a huge gap before the kharif arrivals begin in September-end.

According to the Solvent Extractors’ Association, no permission should be given for additional refining capacity in the country because only 30 per cent of the capacity is being utilised currently.

By ensuring the landed costs are above minimum support prices of concerned oilseeds, growers’ interests could be protected, said Mehta. The PMO had held consultations with the industry since vegetable oil imports are among the top three commodities accounting for a huge foreign exchange outgo. In the last oil season ended in October, 11.6 million tonnes of vegetable oils valued at ₹60,000 crore were imported.

This season, imports are projected to rise to 12.5 million tonnes with shipments into the country already up 17 per cent during November-January.

Import of oilseeds can help reduce the foreign exchange outgo, while also encouraging companies that manufacture edible oils utilise the capacity. In addition, it can help the industry export oilmeals, derived from crushing the oilseeds besides ensuring export of cooking oils too.

Published on February 19, 2015
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