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Union Budget 2015-16: Ensure competitive pricing for sugar, edible oil

Dinesh Shahra     February 25, 2015

Dinesh Shahra

Duty differential: International prices of edible oils have fallen by 6-8 per cent since the beginning of 2015. Thanks to this, the import of edible oils is expected to jump to 125 lakh tonnes for the year ending October 2015, from 116 lakh tonnes for the year ended October 2014. The trends are already visible with imports rising to 23.3 lakh tonnes for the two-month period between November and December 2014, from 20.1 lakh tonnes for the corresponding period of the previous year.

Import duty on both crude and refined vegetable oil was hiked by 5 per cent in December 2014. This has neither helped the farmers nor the local refiners. Neither has the realisation of oilseed farmers increased nor has the capacity utilisation of the refining industry improved in India.

In order to correct the situation, we would once again like to urge the Union government to immediately increase import duty on crude vegetable oils from 7.5 per cent to 10 per cent, and refined vegetable oils from 15 per cent to 25 per cent, creating a duty difference of 15 per cent between crude and refined oils. This will support farmers as well as the vegetable oil refining industry. Consumers will not be affected as prices of edible oils in the international market are lowest since July 2009, and the future quotes for the next six months are showing no signs of increase.  

The revised duty structure would generate additional annual revenues of Rs 6,500 crore to Rs 7,000 crore. This can be used for the oilseed development programme and raising oilseed productivity.

Levy of import duty on palm stearin and other industrial oils:
The government withdrew the import duty on Palm stearin and other industrial oils used for manufacturing of soaps in the last Budget. Palm stearin and fatty acids are produced by the refining industry as by-products during the refining process. The import duty exemption has resulted in a drop in the landed costs of the imported products and, therefore, works out to be cheaper than those produced in the domestic market. So, the government should take steps to bring the import duty on these products on a par with the import duty on crude vegetable oils.

Minimum support price for sugarcane: The minimum support price for sugarcane given to farmers has resulted in Indian raw sugar exports becoming uncompetitive. The soybean meal industry too faces a similar situation. It should be given export subsidy along the lines of raw sugar exporters. This will help solvent extraction plants.

Soya food in mid-day meal:
It would be appreciated if the government gives budgetary support to include soya food in all mid-day meals or Anganwadi schemes, and other programmes of the government. This will help the government solve the malnutrition problems for the masses to a large extent.

The author is Founder and Managing Director, Ruchi Soya Industries

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