Industry demands separate duty structure to curb edible oil imports
Deepak Kumar | The Dollar Business
Distressed over India’s growing dependence on edible oil imports, the industry on Monday urged the government to introduce separate import duty structure on vegetable oil and crude oil to curb its inbound shipments. “International oil prices have fallen, and we find it cheap to import oil from other countries. The government had slightly increased duty on vegetable oil imports, but the quantum of increase wasn’t sufficient. We had presented the government a different import duty structure on vegetable oil and crude oil, in which import duty on vegetable oil should have been 15% higher than that on crude oil,” Y M Mogul, Deputy Secretary of the Solvent Extractors’ Association of India, told The Dollar Business. India’s dependence on edible oil imports has surged to nearly 70% in the current financial year. Imports of vegetable oil in September increased by 16% to 12.16 lakh tonnes from 10.47 lakh tonnes during the same period last year. India imported over12.05 lakh tonnes of edible oil and 11 thousand tonnes of non-edible oils during the month. “We will need to encourage our domestic producers by ensuring a fair price policy. Increasing import duty on vegetable oil and giving a push to our domestic producers will help us become self-sufficient in coming years,” another industry expert told the Dollar Business. Overall imports of vegetable oils during November 2014 to September 2015 rose by nearly 22% to 129 lakh tonnes from 106 lakh tonnes imported during the same period a year ago. Share of imported crude oil went up by 3 percentage points to 89% from 86% during the same period. In September this year, India had hiked import duty on crude and refined oil by 5 percentage points – to12.5% on crude vegetable oil and 20% on refined oil - with an aim to curb its excessive imports. India consumes about 19 million tonnes of vegetable oil each year. At a time when oil consumption is expected to grow at about 10% per year, the country produces a mere 30% of its domestic requirement. Overall import cost is expected to escalate by nearly 40% to $14 billion – the third highest after petroleum and gold. “Vegetable oil production in India is less than our domestic requirements. Plus, India’s oil producers aren’t encouraged by the government. They are quite price-sensitive. When international prices are low and domestic production isn’t viable, India chooses to import oil in order to meet its requirement,” Mogul said.