The Solvent Extractors’ Association of India (SEA) has asked the government to increase the duty difference between crude and refined palm oil from 7.5 per cent to 15 per cent.

In his monthly letter to the members of the association, Ajay Jhunjhunwala, President of SEA, said the Indian edible oil Industry, with a size of ₹300 lakh crore ($35 billion), holds significant importance. Indonesia and Malaysia have been imposing higher export taxes on crude palm oil (CPO) compared to refined oil over the last 12 years to protect their refining industry. This has made refined oil cheaper, rendering Indian capacity redundant and unutilized.

In contrast, the duty differential between CPO and refined palm oil in India, which was initially 10 per cent, has been reduced to 7.5 per cent serving the interests of the refining industry in Malaysia and Indonesia, he said.

Stating that the low duty differential is negatively impacting domestic vegetable oil refining industry, he said SEA has once again appealed to the government to raise the duty difference between crude and refined palm oil from 7.5 per cent to 15 per cent.

Record imports

Referring to the edible oil import figures, he said India imported a record 164.7 lakh tonnes (lt) of edible oil during the just concluded oil year 2022-23 (November-October).

The palm oil segment accounted for almost 60 per cent of imports. The landed prices of RBD palmolein were less than CPO. He attributed this to higher export tax-cess on raw materials by the exporting countries. “This situation poses a significant threat to the profitability and viability of our refining industry, with many units now functioning solely as packers. Such a scenario is undesirable as it could lead to an increase in non-performing assets for supporting banks and shareholders, along with heightened unemployment in the industry and the value chain,” he said.

Ban on rice bran

Terming the ban on exports of de-oiled rice bran a major concern for the industry, Jhunjhunwala said the ban negatively affects solvent extraction, without serving its intended purpose of reducing dairy costs as de-oiled rice bran price has least impact on milk and dairy prices. The price of de-oiled rice bran dropped from ₹18,000 a tonne in August to nearly ₹13,500 a tonne now.

Urging the ministries concerned not to extend the ban on export of de-oiled rice bran beyond end-November, he said the SEA delegation will also be meeting the ministers and senior officials concerned in the coming days hoping for a positive outcome.

Positive in groundnut

He said the export of oilmeals has increased by 30 per cent from April to October 2023-24 when compared to the same period last year. Rapeseed meal is leading the pack with exports of over 15 lt.

He said groundnut, which is a significant kharif oilseed crop due to its high edible oil content, has seen positive developments. A 17-member team has assessed Gujarat’s groundnut crop at 33.45 lt, up from 30 lt last year. SEA-Solidaridad Model Groundnut Farms are playing a crucial role in training groundnut farmers in western Madhya Pradesh and northwest Rajasthan to significantly improve their yield, he said.

Jhunjhunwala said the government has decided to increase the minimum support price for rapeseed-mustard and safflower seed by ₹200 and ₹150 a tonne to ₹5,650 a tonne and ₹5,850 a tonne, respectively. While this will support the farmers, it is crucial for the government to take additional steps to enable market forces to meet or exceed these prices. It is high time for the government to increase the import duty on edible oils and eliminate restrictions on futures trade, he added.

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