Agri Business

Oilseed sector seeks fresh policy impetus from Centre

A J Vinayak Mangaluru | Updated on January 17, 2021 Published on January 17, 2021

With the country’s dependence on edible oil import reaching 70 per cent, the sector wants the Government to give thrust on increasing production and productivity of oilseeds in the country in the forthcoming Budget.

BV Mehta, Executive Director of Solvent Extractors’ Association (SEA) of India, told BusinessLine that the association wants the government to give focus on increasing the production and productivity of oilseeds in the Budget.

Some of the suggestions included shifting of acreage from grains to rape-mustard in Punjab and Haryana. Stating that the oilseed production is stagnant at around 28-30 million tonnes per annum with a productivity of around 900-1,000 kg/ha, he said there is a need to focus on increasing the productivity to 1,500 kg/ha.

Closing gap

Urging the need to operationalise NMEO, he said it will help curb the gap between domestic demand and production of edible vegetable oils. SEA has requested an allocation of ₹4,000-5,000 crore per annum with special focus on crops such as mustard, groundnut, soyabean and oil palm.

SEA had suggested levy of an ‘Oilseed Development Cess’ of ₹2,500-3,000 per tonne on imported edible oils. This would generate a revenue of ₹4,000 crore per annum. This would fund the NMEO with no extra budgetary support.

Shift acreage

SEA has suggested the diversion of some land holdings in Punjab-Haryana region from wheat and rice production cycle to soya, sunflower and maize in kharif and rape-mustard seed in rabi season.

Around 60 lakh hectares of land is earmarked for wheat cultivation in Punjab-Haryana region. If 50 per cent of the available land is shifted to mustard cultivation by 2025, the country could get additional 60 lakh tonnes of rape-mustard. This would translate into 25 lakh tonnes of additional oil, Mehta said.

Import of refined oil

Sudhakar Rao Desai, President of Indian Vegetable Oil Producers’ Association (IVPA), requested the government to categorise the import of refined oil from restricted to prohibited list under the foreign trade policy view of the refining capacity available in India.

He said the Custom Duty on various crude edible oils is charged as tariff value notified by CBIC on a fortnightly basis. However, the same doesn’t apply for crude sunflower oil and custom duty is levied at transaction value. He said this is an anomaly to be corrected by introducing tariff value for sunflower oil like in other oils.

Biofuel

Some in the refining industry also make biofuel as an allied industry. However, the production has come down due to the high prices of edible oils. He requested the government to reduce the GST on biofuel from 12 per cent to 5 per cent, as this will encourage itsthe usage and production of biofuel.

GST

He said the GST is paid on capital goods by the industry, but is not allowed to be set off against their sales. To ease the liquidity crunch, he suggested that the said GST paid on capital goods be allowed to be set off against the sales made by the industry. This will greatly help in cash flows of the industry in the high price environment, he said.

PDS

If the edible oil is to be distributed in PDS (public distribution system) due to high prices in the market, it should be bought from the local refineries only due to excess capacity available in India, the IVPA President said.

Alternatively, he said, direct subsidy to ration card-holders may be granted through a cash transfer system so that the ration cardholders will be able to buy directly from the market as against the supply of edible oils through existing PDS shops. This will be simple to administer without inventory price risks and without distorting the functioning of the market-driven competitive prices, Desai said.

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Published on January 17, 2021
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