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Fearing large-scale cheaper refined oil imports, the edible oil industry has urged the Government to hike duty on refined, bleached and deodorised (RBD) palmolein to up to 20 per cent.
At present, refined oils attract a duty of 7.5 per cent. The Government recently imposed a duty of 2.5 per cent on crude palm oil (CPO).
This has reduced the duty differential between the two oil categories to 5 per cent and has made imports of refined oil cheaper, thereby threatening the viability of domestic refineries.
“A 10 per cent duty differential between crude and refined edible oils will benefit both the farmers and refining industry,” said Vijay Data, President, the Solvent Extractors Association of India (SEAI).
However, Data said the hike in import duty would not affect consumers as edible oil prices have seen the slowest hike in the past eight years, according to the Government’s wholesale price index data, compared with other commodities such as rice, wheat, pulses and eggs.
SEAI wants the import duty on crude edible oils to be increased to a minimum of 10 per cent and that of refined oils be pegged at 20 per cent to protect the domestic industry, Data said.
India is the largest importer of edible oils and its total imports stood at 9.8 million tonnes (mt) last year.
For the current oil year ending October 2013, SEAI expects imports to grow by 15 per cent to 11.5 mt, Data said.
India imports bulk of its palm oil required from Indonesia and Malaysia.
Capacity utilisation
The 15 million tonne edible oil refining industry is currently operating at a capacity of 50-60 per cent. “With refined oils turning cheaper, the capacity utilisation could slip further to 40 per cent,” said Sushil Goenka, Director, Food Fats and Fertilisers Ltd
RBD palmolein accounted for about 11 per cent of the total palm oil imports into the country during the August-December period.
“If the duty structure is not changed, we expect the RBD palmolein to account for 20-25 per cent of the total imports in the next few months,” Data said.
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