Vegetable oil import bill likely to be low

In the first 11 months of the current oil year, vegetable oil imports rose 5.5 per cent to 9.7 mt, compared with 9.2 mt in the year-ago period

Import of vegetable oil, one of the top commodities in India’s import bill, has fallen in the first half of this financial year. According to data provided by the Solvent Extractors’ Association of India (SEA), total imports, of edible and non-edible oil (refined and crude), fell 6.25 per cent in volume terms in the first half of the year. During the same period, oil prices fell two to 12 per cent in the international market, keeping a check on the overall bill.

B V Mehta, executive director of SEA, said in the 2011-12 oil year (November-October), the import bill was $10.2 billion. For the 2012-13 year, it is expected to stand at $9.6 billion, as prices, on average, have been 15 per cent lower year-on-year.

In the remaining part of financial year 2013-14, “prices in the international market will remain under check and may also fall marginally, as supplies are higher than demand. For India, a lower price could help improve consumption. In quantity terms, imports may rise but due to the overall lower price, the import bill, in dollar terms, is likely to remain under check in FY14”, Mehta said.

In the first 11 months of the current oil year, vegetable oil imports rose 5.46 per cent to 9.66 million tonnes (mt), compared with 9.16 mt in the year-ago period. If the current trend continues, overall imports could break the psychological barrier of 10 mt this year.

In September, imports declined for a consecutive month, as traders refrained from fresh bookings, amid expectations of further appreciation of the rupee against the dollar. Total imports plunged 13.1 per cent to 8,63,917 tonnes from 9,93,912 tonnes in the corresponding month last year. In August, imports fell 15.5 per cent, data compiled by SEA showed.

In September, the import of refined oil stood at 20 per cent, offering a breather to domestic refiners. In May this year, the share of refined oil to the overall import basked had risen to 42 per cent, and this had forced domestic refiners to idle installed capacities and focus on the trading business. With a steady increase in imports, India's reliance on imported vegetable oil is rising. Imported vegetable oil is primarily used to produce edible oil. It is also used as a raw material in soapmaking. With an estimated 7 mt of production from domestic sources, India meets about 55 per cent of its annual consumption of 16.5 mt through imports, largely from Malaysia, Indonesia and Argentina.