Soya industry asks for excise duty exemption

The industry is going through a difficult phase

Indore-based Soyabean Processors Association of India (SOPA), the only soya-yield estimating body in the country, has urged the government to stay the exemptions available on excise duty on edible oils. Sopa Chairman Rajesh Agrawal in a message to P Chidambaram, Union minister of finance has requested to avoid imposing excise duty on edible oil.

"The soyabean processing industry is passing through a very difficult phase of operations. Against an installed capacity of 17 million tonnes, the availability of raw material is about 5.5 million tonnes and therefore, capacity utilisation comes to about 35 per cent only. This industry is a high turnover-low margin one, having heavy domestic as well as international competition," Sopa said, in its letter dated February 10 to the finance minister, adding, "The government's total revenue through excise duty on edible oil was miniscule in comparison with the total production of edible oil, which was about 110-120 lakh tons, having a market value of around Rs 35,000-40,000 crore."

Sopa has suggested alternate means of earning revenues by imposing taxes or duties which are to be levied and paid along with Customs duty depending on the stage of production.

Sopa has also said profit margins in the industry were very low ranging between 0.5 per cent and 1 per cent. "Sometimes, the industry functions below the break-even point, and therefore a high incidence of duty on edible oil is likely to lead to a tendency of avoidance of taxes, resulting in huge disparity within the industry," Sopa said.

It further said the high incidence of excise duties on edible oil would result in lower realisation to the oilseed farmers. This fact could be verified from the price charts of years in which excise duties on edible oil had been levied.

Sopa in its message said, "We understand from market sources that some representations have been sent to the government requesting for a re- imposition of excise duty on packaged and branded edible oil."

According to Sopa, around 5 million tonnes of edible oil are imported annually by India, more than 50 per cent of which is refined by port-based (Kutch) edible oil refineries that are exempted from excise duty.