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Edible oil makers, refiners seek hike in duty to bring down import curve
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Monday, 03 November, 2014, 08 : 00 AM [IST]
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Libin Chacko Kurian, Mumbai
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fiogf49gjkf0d With the recent sharp rise in import of edible crude as well as refined vegetable oils into the country, domestic oil manufacturing and refining companies are seeking government intervention in the form of increase in import duty on both varieties of oils.
In this regard, domestic manufacturers are affected by imports of both crude and refined varieties and refiners are facing a threat from the spike in import of refined kind. That being the scenario, in order to lessen the pressure on the domestic industry, the Solvent Extractors’ Association of India is seeking a hike in import duty on crude vegetable oils from 2.5% to 10% and refined variety from 10% to 25%.
According to the association, the current edible oil prices in the country are at a historic low since 2008 and this situation is accelerating imports. A report by the association, explained, “Imports of vegetable oils during September 2014 were up by 21% compared to September 2013. The overall import of vegetable oils during Nov. ’13 to Sept. ’14 is reported at 10,572,994 tonne compared to 9,656,300 tonne i.e., up by 9.5%. Thanks to higher import of crude soybean, sunflower and canola oil, which constitute over 30% of the total crude oil imports.”
Apart from the domestic low price trend that has spiked imports, export incentives offered by some countries to their industry are adding fuel to the fire. For example, Malaysia has announced nil export duty on palm products for two months with effect from September 1, 2014, and Indonesia has extended nil duty facility to its trade beginning October 1, 2014, with an aim to transfer their burgeoning inventories to India.
Throwing more light, Anil Agrawal, director, Sanwaria Agro Oils Ltd (the company is known for both production and refining), revealed, “We are finding very less profit margin in refining edible oils in last two years compared to earlier. One of the main reason was the heavy importation of crude and refined edible oils. Malaysia and Indonesia are dumping huge quantity of palm oil in India.”
On a signing note, he asserted, “Government has to increase the import duty to help domestic players. The low tax allows heavy importation at very cheap rates. High taxes will give a relief to domestic players. There is a handsome demand for oil in India, which is different in each region. This demand can be utilised effectively by domestic production and refining companies.”
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