Financial Daily from THE HINDU group of publications
Wednesday, May 29, 2002
Agri-Biz & Commodities
Oilseeds & Edible Oil
Trade demands direct import of sunoil under tariff quota
MUMBAI, May 28
EDIBLE oil importers and refineries, especially players in the growing branded oil segment, are livid over the inordinate delay in issue of tariff rate quota (TRQ) for import of soft oils such as sunflower oil. Some even go to the extent of branding government's indifference as anti-consumer.
On their part, industry and trade associations from different parts of the country have drawn the attention of the policy makers to the unintended lacuna in Government policy as a result of which only two oils degummed soyabean oil and crude palm oil are imported into the country, virtually ruling out import of other oils.
Pointing out that the present import duty structure was not in consumer interest, the associations have demanded a more rational duty structure that would allow consumers across the country a choice of oils and provide refineries a variety of raw material to cater to market needs.
``Because of low WTO-bound duty (45 per cent ad valorem), soyabean oil is crowding out other oils. This is not in the interest of Indian consumers; and worse, low-duty soyabean oil import hurts our own domestic soyabean sector interest'', according to Tamilnadu Oil and Seeds Association (TOSA).
Importers have taken exception to the continuing delay in the issue of tariff rate quota (TRQ) for import of soft oils such as sunflower oil, safflower oil and rapeseed oil at lower rate of duty. ``The import notification should have been issued by early April; but even two months after the announcement of new exim policy, we are waiting for the notification from Director General of Foreign Trade'', lamented an importer.
Last November, the Government recognised the need for encouraging import of soft oils other than soyabean oil at competitive rates of duty, and therefore, permitted soft oils such as sunoil under TRQ of 1.5 lakh tons at 50 per cent duty. The policy was valid till March 31. Imports were allowed through state enterprises, STC and NAFED.
However, TRQ was not utilised and no imports took place because the guidelines for import were issued as late as January 2002. ``There are serious operational difficulties in dealing with state agencies; they act as intermediaries and add no value at all; but surely add to the cost of the product'', some importers fumed.
As a result, the Government's objective was not served and consumers' choice was artificially restricted even after the government allowed imports. Importers want the anomaly corrected.
``As the policy-makers have in principle accepted the need for importing various soft oils at competitive rate of customs duty, there is dire need to remove operational hardships arising out of imposition of TRQ and conditions associated with it'', the TOSA said in a representation to the Government.
Interestingly, import of sunoil under TRQ is most unlikely to hurt domestic interests as the country's production base for sunseed is rather small. There are several refineries including those of large corporates specialising in marketing refined sunoil in branded consumer packs. Sunoil is well known as a healthy cooking medium.
The Indian Vegetable Oil Processors Association, a trade body of major importers, has urged the Government to release the TRQ without any further delay. The association has demanded that the condition of import through state agencies should be done away with and that imports should be permitted on actual-user condition.
Argentina used to be the largest supplier of sunoil to India until early last year when imports were feasible. Voyage time is roughly six weeks. A decline in global sunoil output has pushed its prices much higher than soyabean oil.
According to private estimates, consumption demand for refined sunoil in the country is about six lakh tonnes, while domestic production is just around three lakh tonnes, leaving a large gap to be filled through imports.
However, no imports have been recorded for the last several months. Refined sunoil used to be fastest growing segment of the edible oil market, but no more.
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