As crushing season begins, illegal imports worry edible oil industry

Suresh P Iyengar Mumbai | Updated on September 30, 2019

SOPA claims duty evasion of Rs 2000 crore

The Soyabean Processor Association of India has voiced concern over illegal imports of edible oil from Nepal, Bangladesh, Sri Lanka and other SAARC countries without paying import duty.

In a letter to Prime Minister Narendra Modi, Sopa pegged the loss to exchequer from duty evasion at over ₹2,000 crore.

Also read: Extended monsoon clouds prospects of Kharif oilseeds, pulses crops

The association had informed the ministries of commerce, finance and agriculture of the illegal imports, which continue with impunity and have increased in recent months, said the association.

Duty evasion

The industry is worried over the large-scale illegal imports, particularly when the crushing season is about to begin next month.

The government had increased the import duty on edible oil to protect the domestic industry. The duty-free imports are negating the advantage of customs duty increase on edible oil, which was imposed to help farmers realise remunerative prices. The illegal imports are not only causing customs duty evasion but also unnecessary outflow of foreign exchange, Sopa said.

The matter has been bought to the notice of the Central Board of Indirect Taxes and Customs. Seeking the intervention of the Prime Minister's Office, the association said necessary direction needs to be given to restrict duty-free imports of edible oil by implementing Rules of Origin strictly.

Rain damage

With the crop season set to begin in October, oilseeds growing farmers in Gujarat, Madhya Pradesh, Maharashtra and Rajasthan are facing hardship due to heavy rainfall. The groundnut crop in Gujarat has been infested with white fungus due to water logging. It is expected to affect the yield.

Though oilseeds sowing in 2019-20 kharif season was a tad lower at 178 lakh hectares as against last year’s coverage of 178.17 lakh hectares, the soybean area was higher at about 113.45 lakh hectares over the normal sowing of 111.49 lakh hectares. Groundnut sowing was lower at about 39 lakh hectares, as against the normal 42.44 lakh hectares.

According to government estimates, oilseed production is likely to be higher at 22.39 million tonnes as against 21.28 mt reported in the fourth advance estimate for 2018-19.

However, as per industry estimates, oilseed production this year is expected to be slightly lower than the 35 mt produced last year.

Record imports likely

“Floods and bad weather may pull down the main soybean production to 9.2 mt from the earlier estimate of 9.5 mt following the crop damage,” said an industry expert at the recent Globoil Summit. Oilseeds grown in India are soybean, groundnut, sunflower, nigerseed, sesame, and mustard.

Lower oilseed production and growing domestic demand are expected to take India’s edible oil imports to an all-time high of 15.9 mt over the 15.4 mt logged last year. India imports crude and refined palm oils along with crude soyoil, sunflower oil, and mustard oil.

Soyabean prices on the futures dropped on profit booking after prices rallied on fear of lower crop output this year.

The IMD forecast of heavy rainfall in Madhya Pradesh for four more days sparked renewed buying in anticipation of crop damage.

Meanwhile, refined soya oil gained on persistent demand in physical market for the ongoing festive season.

Published on September 30, 2019

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