Edible Oil Trade Sees Little In Budget
Edible oil traders in the country expect little change in import duties in the budget because the centre-left government will refrain from steps that fuel inflation, industry officials and analysts said on Wednesday.
I dont think any edible oil import duty changes will be announced in the budget, Navinbhai Shah, president of Bombay Oilseeds and Oil Exchange Ltd, told Reuters There is no case for an increase in import duty because in the governments Common Minimum Programme, first comes the consumer, said one analyst who asked not to be identified.
Finance Minister P Chidambaram is scheduled to present the 15-party centre-left governments second budget on February 28. Agriculture Minister Chaturanan Mishra, from the Communist Party of India (CPI) said last week he had proposed to Chidambaram an increase in import duty on edible oils to 30 percent from the current 20 percent. Mishra said due to lower duties edible oil imports were turning out to be cheaper compared with domestically produced oil, hitting farmers and the industry. Industry officials said any increase in import duties in the 1997/98 (April-March) budget would not have an immediate impact on the domestic market. But a duty increase would have a cascading effect on prices of domestically produced oils once the lean season starts in July.
I dont expect any variation in duty but we are requesting the government to consider imports of oilseeds, Dhanji Sawla, chairman of the Central Organisation of Oil Industry and Trade (COOIT), said. It will help to firm up the idle refining capacity which is currently around 60 percent, Sawla said. Prime Minister H D Deve Gowda said in November that he would look into the COOIT demand for allowing free imports of oilseeds.
He had said the government would consider allowing free import of oilseeds provided the farmers were protected and consumers benefited from the move.
K M L Chabbra, executive director of COOIT said the government should work out a clear edible oil import policy, including allowing imports of oilseeds and futures trading in edible oil.
The annual Economic Survey, tabled in the parliament by the government on Wednesday, said the 1996/97 (July-June) oilseeds crop was expected to be 24.1 million tonnes compared with 22.4 million in 1995/96.
Analysts said demand for edible oil was growing because of growth in population and rise in disposable incomes. Industry officials said edible oil demand was expected to increase to 1.5 million tonnes in 1996/97 (November-October), compared with 1.2 million in the previous year.