Import of vegetable oil slipped 22 per cent in January to 9,05,814 tonnes against 11,57,130 tonnes due to the inverted duty structure followed by exporting countries.
Skewed duty In a bid to encourage local refining, exporting countries such as Indonesia and Malaysia have hiked duty on crude oils compared to refined oils.
This had squeezed margins of Indian refiners who import crude vegetable oil and sell them the in domestic market after refining it.
Import of refined palmolein increased to 2.08 lakh tonnes in January against 1.64 lakh tonnes in the previous month, while crude palmolein import fell to 3.4 lakh tonnes from 6.92 lakh tonnes.
This was largely due to refined palmolein (a finished product) being sold $15-20 a tonne lower compared to crude palmolein, the raw material.
Before the inverted export duty was imposed by Indonesia, refined palmolein used to be sold at least $60-80 a tonne higher than crude palmolein which was giving some comfort level to Indian refiners to import and process CPO.
In view of increased import of refined palmolein in the last two years, capacity utilisation of domestic refiners have dropped from 55-60 per cent to 30-35 per cent and many units closed down or are on the verge of closure, said the Solvent Extractors’ Association of India.
Vegetable oil imports in January consisted of 8,71,527 tonnes of edible oils and 34,287 tonnes on non-edible oils.