India's rising edible oil imports has left the domestic industry in splits as two of the prominent trade bodies came face-to-face on quota suggestions.
Recently, Soybean Processors Association of India (SOPA) sought a quantitative quota and higher import duty for crude soybean and sunflower oils citing "unbridled and burgeoning" imports of edible oils in India - hurting interests of the farmers and processors.
SOPA for quota
In its July 28 letter to the Union Commerce Minister Piyush Goyal, SOPA Chairman, Davish Jain said, "The oilseed and edible oil sector needs a complete make-over and shift in policy, aimed at drastically reducing edible oil imports and doubling the local production of oilseeds." He had suggested raising customs duty on crude soybean oil from 35 per cent at present to WTO-bound rate of 45 per cent and that on crude sunflower oil from 35 per cent to 50 per cent.
SOPA has also suggested fixing quantitative import quota/limit for the two varieties of oils - crude soybean and sunflower oil at one lakh tonnes each per month during October to January period. Whereas for the remaining period, the quota limits may be fixed at 2.5 lakh tonnes and two lakh tonnes respectively. SOPA also pointed at an all-time high soybean oil imports at five lakh tonnes for July 2020.
The suggestions came at a time when soybean crop is in the field and output is estimated at an all-time high. "If immediate steps are not taken to control imports of edible oils, we are afraid the soybean prices will crash much below the MSP causing distress to the farmers," Jain said expressing concerns.
On the other hand, solvents' body Solvent Extractors' Association of India (SEA) has disagreed with SOPA’s proposal and termed the suggestions as "counterproductive and against the interests of farmers and domestic refiners."
Will breed corruption
SEA, in response to SOPA's proposal, shot off a letter to the Union Commerce Minister expressing its objections.
"We appreciate the concerns of the Soya Industry.. but feel the objective of raising domestic Soya Oil prices cannot be served by imposing quotas which will prove to be counterproductive," SEA said pointing at India's highly price-sensitive edible oil demand.
"If Soya Oil /Sunflower Oil Import is put under quota restriction, it would lead to Palm Oil flooding the Indian markets and hammer down the domestic oilseeds prices. This would harm the interests of the Soya farmers too. The suggested cure is actually worse than the disease," Atul Chaturvedi, President, SEA said in a letter to Goyal expressing fears of the quota system breeding corruptions, confusion and implementation issues.
The solution lies in raising the import duty on all oils suitably and linking it with MSP to ensure that farmers get a price above the MSP from the market and Government agencies do not have to step in for market intervention operations, SEA stated.