Edible oil refineries ask for protection from rising import

Refineries claim loss of Rs 3,000 a tonne, in the wake of rising imports

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Edible oil refineries claim losses of Rs 3,000 a tonne, up threefold in six months, in the wake of rising imports of refined, bleached and diodised (RBD or refined edible oil) palmolein.

“The impact is visible, with sharp increase in import of RBD palmolein in the past few months,” said Atul Chaturvedi, chief executive officer, Adani Wilmar, producer of the Fortune brand of edible oils.

The apex industry body, Solvent Extractors’ Association (SEA), says refined oil import quadrupled to 231,672 tonnes in November from 55,815 tonnes in the same month last year. The share of RBD olein jumped to 17 per cent in November from five per cent in the same month of 2014. It has urged the government to raise the import duty on refined oil. Processing of CPO generates jobs, increases the operating capacity of local refineries and adds economies of scale to the entire value chain, it has argued.

“The differential duty, therefore, needs to be raised to 15 per cent immediately, to protect the interest of local refineries,” said B V Mehta, executive director, SEA. At present, the total levy on CPO and RBD works out to 12.5 per cent and 20 per cent, respectively, a 7.5 per cent differential duty. The processors want the import duty on refined oils to be raised from 20 per cent to at least 27.5 per cent.

“This will ensure full value addition is done in India, with refining, packaging, trading and marketing of edible oil in-country. This will also ensure a farmer gets a remunerative price for his produce in the ensuing rabi harvest, with a small increase in oilseed prices,” said Mehta.

SEA says the operating capacity of domestic refineries has declined to 45-50 per cent, from 65-70 per cent around six months earlier. India meets 55 per cent of its annual edible oil demand through import.

A Macquarie Research report estimates an eight per cent decline in rabi oilseeds’ sowing area at 6.6 million hectares so far this season, against 7.1 mn ha by the same time last year. The inventory of edible oil at various ports and in the import pipeline was a record high of 2.43 mt as of December 1, estimates the industry.