The Soybean Processors Association of India (SOPA) has urged the Narendra Modi government to increase duty on imported crude soybean oil to 37.5% and 45% on refined soybean oil, which is the WTO bound rate. This will check large scale import of cheap soybean oil and enable the domestic industry to start soybean meal exports again. It will also encourage soybean and other oilseed growers, the association feels.
In a letter to the Prime Minister, SOPA chairman Davish Jain has said that the soybean processing industry has been going through one of its toughest periods for the last 3 years and many of the units have had to close down. The major reason for this is large scale import of cheap edible oils including soybean oil at low rate of duty which has pushed up our prices of soybean meal and made us uncompetitive in the world market. Our exports have fallen from a high of Rs. 15000 crores to just Rs. 1500 crores during the last four years. The attached table and graph clearly show that as the soybean oil imports went up, soybean meal exports went down correspondingly and from a net foreign exchange earning of Rs. 6545 Crores in 2012-13, there was a net foreign exchange outflow of Rs. 19419 Crores in 2015-16. The net impact of increased soy oil import alone would be Rs. 25664 Crores.
"The burgeoning import of soybean oil which has increased several fold from a mere 10.55 lakh tons per annum (average of 2011-13) to 40 lakh tons (likely import in 2016) is also detrimental to the interest of oilseed cultivation in the country and will take us toward being totally dependent on imported oil as our own production of oilseeds may further go down," the letter adds.
At a time when the entire oilseed processing industry, particularly the soybean processing units are in great distress and facing closure because of cheap oil imports, the lobby of a handful of large importers and refiners have taken the opposite view in their own self-interest and have asked the government for reduction in duty on crude edible oil. This move has created a clear demarcation between the interests of business, led by importers versus the industry which is striving hard to survive.
The decision to maintain a duty differential of 7.5% between refined and crude oil was taken after careful consideration and a thorough investigation by the Tariff Commission (Ministry of Finance) into all aspects of oil refining. The cost of crude oil refining is not more than 5% at current prices and the 7.5% duty differential adequately protects the interest of crude oil importers. The demand for higher differential duty is, therefore, totally unjustified.
Right now when the very survival of the indigenous crushing industry is at stake, any reduction in duty will only mean more sickness, moving away of farmers from soybean cultivation and further increase in our dependence on imports. If the foreign suppliers were to take advantage of the situation and increase edible oil prices, the story of pulses may get repeated in edible oils also, Jain said in the letter.
Sources :economictimes.indiatimes.com
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