Commodities

Import duty reduction has not helped govt, consumers: SEA

Our Bureau Mangaluru | Updated on October 23, 2021

Says move will prove to be counterproductive

The Centre has lost revenue even without consumers getting any relief from the recent reduction of import duties on edible oils, according to the Solvent Extractors Association of India (SEA).

In a letter to its members, Atul Chaturvedi, SEA President, said with edible oil prices relentlessly marching northwards, the government made matters worse by reducing import duty on crude soya and sunflower oil to nil and on refined oils to 17.5 per cent.

“While we understand and sympathise with the dilemma of policy makers, we have been saying time and again that during times of scarcity and our continued heavy dependence on imports this move would actually end up being counterproductive.

“Our worst fears have once again proved right as import values have gone up significantly and negated the full impact of duty reduction. Government has lost revenue without the consumers getting any relief,” he said.

On the government’s order to monitor the stock of oil and oilseeds, he said the government has issued an order that the States should set the limit for the stock of oils and oilseeds that a trader or an industry can hold. He said Sudhanshu Pandey, Secretary Food and Public Distribution, recently interacted with the industry to understand the difficulty faced by the industry for declaring the stocks held by each company. “It looks many State governments are reluctant and yet to notify the stock limit in their respective States,” he said.

Mustard

Chaturvedi said the runaway price of rapeseed-mustard had compelled SEBI to instruct NCDEX to stop issuing new contract in futures and options for rapeseed-mustard with effect from October 8, and permitted only squaring up existing positions aiming to cool down the prices.

He said this situation would not have arisen had SEBI/NCDEX taken measures initially by imposing margin/circuit breaker etc from time to time.

Stating that futures trade is a necessity for price discovery and helps industry and farmers, he said shooting the messenger can never be the solution to bring down prices as has been amply demonstrated after this action.

Oilseeds production

On the oilseeds production estimate, Chaturvedi said initial reports of rebounding kharif oilseed production and prospects of a very high acreage of rabi mustard are a silver lining in this relentless bull run in edible oils. Initial reports emanating from mustard growing regions indicate that farmers are sufficiently enthused with high prices and diverting land meant for other crops.

He said SEA’s team, which conducted groundnut crop survey in Gujarat recently, estimated a crop of 38.55 lakh tonnes (lt) in the State alone. Indian Oilseed and Produce Export Promotion Council has estimated all India groundnut kharif crop at 82.0 lt. This, coupled with the assessment of Soyabean Processors’ Association of India of 118.9 lt for soya, the oilseed crushing industry should have adequate supply of raw material during the year, he said.

National Mission

On the National Mission on oilseeds, he said the recent bull run in edible oil prices should sound alarm bells for decision makers and galvanise them into taking proactive action on the Prime Minister’s ‘Aatmanirbharta’ project in edible oils. “It is surprising that thrust on oilseed development is still a low priority even though our dependence on imports is close to 65 per cent and import bill ballooning,” he said.

The government has announced ₹11,000 crore investment in oil palm project. However, oil palm has very long gestation of around six years and cannot be the only answer to augmenting edible oil supplies. “With countries becoming more and more inward looking, it is high time we wake up and encourage oilseeds such as groundnut, soya and mustard in mission mode or else our edible oil security would remain highly compromised,” he said.

Published on October 22, 2021

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