Financial Daily from THE HINDU group of publications
Saturday, Aug 28, 2004
Agri-Biz & Commodities
Oilseeds & Edible Oil
Industry & Economy - Exports & Imports
Are port curbs on edible oil imports desirable?
Mumbai , Aug. 27
MUCH on expected lines, the suggestion to impose port curbs on edible oil imports (Business Line, August 26) with the objective of closely monitoring arrivals so as not to compromise on both revenue and quality, has generated protests from some players in the vegetable oils industry.
Those not in favour of such a change call the suggestion retrograde and claim that restrictions are anathema to the spirit of liberalisation and free trade. They point out how the trading interests of importers using small or minor ports would be hurt in relation to those using major ports.
Additional transport cost is a factor to be reckoned with. It is also pointed out that facilities created through investments made by private parties in small ports (like say, Nagapattinam in Tamil Nadu) would be rendered idle if cargoes were channelled through bigger ports only.
Without doubt, these arguments have some validity and are surely not untenable. But they are hardly the reason to let things drift and to ignore the recent event in Bedi port at Jamnagar in Gujarat, which is not an event to be viewed in isolation.
What has happened in Bedi port (misdeclaration, quality problem, loss of revenue) is possibly happening in other ports too. There is an urgent need to strengthen the customs procedures as well as sampling and testing methods. This calls for investment in human resources and equipment as also a transparent system that stands on integrity.
However, there are serious limitations on the part of Government to revamp ports and customs houses across the country. Bureaucratic hurdles, financial stringency and above all, lack of political will cause inordinate delays in transforming numerous Indian ports into modern entry points equipped with appropriate machinery to monitor sensitive imports.
Obviously, until minor ports are upgraded, the trade will have to make do with major ports or designated ports, which are certainly equipped better, if not fully. The move may not eliminate all the problems, but would surely help reduce their severity and frequency.
It is easy and fashionable for those in the industry to blame the system for all its deficiencies and weaknesses. The laws relating to vegetable oil imports are clear, especially relating to rates of customs duty and quality requirements. Misdeclaration of quality and duty evasion is not the result of bad or unclear law; it is the outcome of greed and utter disregard for the system.
There is unfortunately a tendency to mistake liberalisation for licence.
Liberalisation is not licence to indulge in malpractices. It is a responsibility to behave and play within the rules of the game.
This is applicable in letter and spirit to the country's vegetable oils sector, which is almost entirely free from any Government control, unlike say the sugar industry.
It is for the oil industry in general and importers in particular to introspect and follow self-imposed discipline. If indiscipline goes out of control, restrictions would become inevitable. By their very nature, curbs are bound to upset the existing systems and procedures and hurt some or other section of the industry/trade.
The overall national objective of protecting consumer interest and preventing revenue loss shall remain supreme; and opposition to a reasonable restriction in public interest cannot override these important considerations.
Clearly, policymakers and industry captains together will have to take a call on this issue. The industry on its part must specify what proactive role it wants to play in preventing a serious compromise on revenue and consumer health.
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