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the world's fourth largest edible oil economy.
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accounts for 9.3 per cent of world oilseed production.
It has the world's fourth largest edible oil economy.
Yet, about 43 per cent of edible oil available in India
is imported. In 1999, India ranked as the world's largest
importer of edible oils, displacing China. The bulk of
edible oil India imports under the Open General Licence
(OGL) is RBD palmolein of Malaysian and Indonesian origin.
has approximately 300 crude edible oil refining units,
60-70 per cent of which are small. Unlike the bigger refiners,
the small ones are unable to import huge quantities of
crude either due to their low capacity or lack of financial
resources, and may be forced to close down or sell out
to the bigger ones in the foreseeable future.
major problem is the low capacity utilisation. The installed
capacity of oil mills is around 36 million tonnes annually,
but capacity utilisation is only 40 per cent. Solvent
extraction plants show only 33 per cent capacity utilisation
and vegetable oil refineries show 40 per cent.
total import of edible oils during the period from November
1998 to October 1999 totalled 4.4 million tonnes valued
at more than Rs. 9,000 crores. That was against a demand-supply
gap of 1.4 million tonnes in 1998-99. Imports have therefore
deluged the market.
import of refined palm oil was put under OGL (open general
licence) in March 1994. Other edible oils were put under
OGL in April 1995. (When an item is brought under OGL,
it means that the item can be imported without seeking
there was no discrimination between refined and non-refined
edible oil as far as import duty was concerned. The duty
on both was 65 per cent. Duty was then slashed to 30 per
cent for both, then to 20 per cent in 1996 and 15 per
cent in the 1999-2000 budget.
December 30, 1999, a differential duty structure was introduced.
Duty on refined oil was fixed at 27.5 per cent (25 per
cent plus 10 per cent surcharge), while that on crude
was retained at 16.5 per cent (15 per cent plus 10 per
cent surcharge). But only actual users (as opposed to
traders) are allowed to avail of this reduced duty on
crude oil. Traders are nevertheless allowed to import
crude at the reduced duty but only to sell to actual users
on a high seas basis. This requires that the actual user
fills in the import documents (and pays the reduced duty)
but leaves the importing process to the trader.
most parts of the world, import duty on oilseeds is lower
than that on oils. But, in India, it is higher: 40 per
cent. That is why no import of oilseeds or oil-bearing
material has taken place in India. The industry wants
the duty to be lowered from the present 40 per cent to
5 per cent.
oils prices in the Indian market have crashed due to large
imports by multuinational trading houses. See
edible oils industry is one sector in India that will
see considerable reform in the foreseeable future.
of edible oils in India's Mumbai market
(in Rs/tonne except for
RBD Palmolein which is in FOB US dollars)
1/12/99 to 19/1/2000
Palmolein (FOB US$)
Solvent Extractors' Association