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Richa Mishra

New Delhi , Dec. 8

TO give the vegetable oil and oilseeds sector the desired boost, the Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested creation of `Oilseeds and Oil Development Fund'. The fund could be used in promoting the industry and up gradation of the sector.

"Examples such as the Textile Upgradation Fund show that funds can be successfully utilised for promoting the industry," a FICCI official told Business Line. The chamber in its pre-budget memorandum has suggested that the Government should pursue farmers for diversification with policy support and measures, including financial incentive to switch over to oilseed crop. The Government may announce incentive package for diversification of area in the ensuing budget, FICCI said.

Recently, the Union Government has taken pro-active decisions to promote futures trading in various agro-based, precious metals and other commodities, which had been lauded by the entire trade and industry, the official said. The official added, "In order to achieve the results of developing a vibrant futures market in India, exemptions should be extended to brokers engaged in commodity futures or derivatives trading under the Income Tax Act. The Government should allow mutual funds, FIs and FIIs to participate in commodity futures."

In order to promote futures trading in commodities under the auspices of recognised commodity exchanges, the crucial issue is that the Government has to recognise this trade as a `line of business' and not as speculation as considered under the Income Tax Act. "In fact, this is the most significant reason responsible for thin volume at official trading floors and flourishing of various parallel markets or bucket shops at various cities and towns," the official said.

The chamber said: "It is essential to increase the availability of edible oils from domestic resources by encouraging diversification, increase productivity and exploitation of non-traditional domestic sources. This will improve capacity utilisation, increase production, productivity and thereby bring the industry to be fully competitive in the international market."

Further, the chamber has urged for restoration of import duty on refined palmolein to 85 per cent to encourage remunerative price to farmers. It has also sought exemption of non-conventional refined oil from excise duty of Rs 1 per kg and exempting refining of indigenous fixed vegetable oils from excise duty. An appeal to exempt or rationalise excise duty on food grade hexane to reduce cost of production has been made by the chamber.

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