Govt may slash import duty on oilseed
NEW DELHI: In the coming budget, the government is likely to slash its hefty import tax on oilseeds which has kept imports at marginal levels – a move which would boost the country’s processing industry, but could severely affect producers.
The central government may, on its budget statement scheduled for February 28, unveil a reduction of the 30% import tax on oilseeds – a level which is higher than that levied on, for example, vegetable oils.
India last month raised its import duty on crude edible oils by 2.5 points to 7.5%, while lifting the levy on refined oils by 5 points to 15%.
Oil World said that such a levy reduction would chime with an effort by Prime Minister, Narendra Modi to promote within the country value-added operations, such as capturing the margins from processing raw oilseeds into oils and meals.
And it could “become an important element in satisfying the prospective large further growth of demand for vegetable oils and oil meals in India”, Oil World said.
India is the world’s biggest importer of palm oil and soy oil, with demand boosted by increasingly affluent and sizeable population, although it remains an exporter of soy meal – albeit at decreasing volumes, seen falling in 2014-15 for a fourth successive year.
However, the analysis group cautioned that “it would be risky to remove import barriers at a time of low international oilseed prices” – handing processors a double boost.
Such a move “would severely affect Indian oilseed producers, who are probably not all in a position to compete if domestic oilseed prices are pressured further”.
Soybean prices on India’s National Commodity and Derivatives Exchange were, at 3,339 rupees per 100 kilogrammes , down 31% from an April 2014 high.
Spot rapeseed futures were, at 3,330 rupees per 100 kilogrammes, trading at amongst their lowest levels of the past year.
India has historically imported, or exported, the likes of rapeseed, soybeans and sunflower seed only in small quantities, processing the great majority of domestic crop in-country, and topping up product shortfalls through purchases from abroad.