On Wednesday, Finance Minister Arun Jaitley put India’s ₹1,25,000-crore edible oil industry on the brink of lower capacity utilisation as no measures were announced to safeguard the domestic processing industry against the import of cheap refined oils.
The country’s edible oil refiners’ capacity utilisation has already declined to about 40 per cent amid surging imports of refined edible oils.
Solvent Extractors’ Association of India (SEA) data indicate that the vegetable oil industry consists of 15,000 oil mills, 600 solvent extraction units, 600 vegetable oil refineries and 250 vanaspati units spread across the country crushing / processing oilseeds, oilcakes, rice bran and vegetable oils.
The industry had been demanding the duty difference between crude and refined oil imports be raised to 15 per cent from the current 7.5 per cent to safeguard the interests of farmers and improve the capacity utilisation for the refiners.
In its latest data, SEA revealed November-December 2016 imports of refined oil (RBD Palmolein) marginally increasing to 486,502 tonnes from 463,482 tonnes in the same period a year earlier, while that of crude oil fell to 1,843,657 tonnes from 2,278,889 tonnes during the same period of last year.
“There has been nothing specific for the edible oil sector in the Budget. Traders were anticipating a change in duty structure for crude and refined edible oil. However, there was no initiative on that front from the Finance Ministry,” said Hareesh V, Research Head, Geofin Comtrade Ltd.
The domestic edible oil industry has a turnover of more than ₹1,25,000 crore, with ₹65,000 crore from import of vegetable oils and ₹20,000 crore from the export of oilmeals and other oil products. The industry employs over one million people.
Oilseed import mootedThe industry had also expected encouragement for import of oilseeds such as sunflower seed and rapeseed by reduction in import duty to 5 per cent from 30 per cent now to encourage value-addition and employment within the country and thereby encouraging the ‘Make in India’ programme.
The Soyabean Processors Association of India, (SOPA) also expressed its dissatisfaction over the Budget announcements by the Finance Minister.
“The suggestion for creation of an Oilseed Development Fund by levying additional customs duty of ₹3/kg on imported soyabean oil is still pending with the government. This step would check the ever-rising and unbridled import of edible oils, which is discouraging farmers,” said Davish Jain, Chairman, SOPA.
“If immediate steps are not taken to increase oilseed productivity in India, our dependence on imports will keep increasing, which will compromise our food security,” he said.