The edible oilseeds crushing industry may be one of the few industries that is not allowed to import raw materials, while the finished product i.e. edible oil has been permitted to be imported under open general license (OGL) by our government.

The government rightly believes through oil imports the end users, consumers, are protected from steep price fluctuations as they become cheaper through this route when compared with those that are produced domestically.

The country is still not self-sufficient as far as production of edible oils and oilseeds are concerned. Hence to maintain the easy supply of oils permitting oil imports seem to be an easy way out.

This step satisfies not only the consumers, but also the lobby of oil distributors or importers or to be more precise the lobby consisting of foreign exporters.

Though the government agencies have reported a breakthrough in oilseeds production substantially over the past few years, the solvent extraction units complain of insufficient raw materials.

One would be surprised to note such a shortage of raw materials in a country that boasts of a large oil-crushing capacity, and has about 15,000 oil mills spread across the country, over 600 solvent extraction plants, 300 vegetable oil refineries and 175 hydrogenation plants. The mammoth capacity churns out 70 to 75 lakh tonnes of vegetable oil annually. The average utilisation of the installed capacity is somewhere around 35-40 percent, which means that a large 60-percent capacity remains unutilised for want of raw material-oilseeds.

The oil availability from oilseeds varies depending upon the variety of seeds chosen for extractions. Like for example, oil extracted from copra (dry coconut) amounts to 65 per cent of total seeds (copra) crushed, whereas oil extracted from cottonseed is 11 per cent.

The oilcakes from ghanis (rural oilmills ) contain as high as nine percent oil residue resulting in a huge national loss. These plants are in urgent need of an upgradation so that the oil can be recovered from the waste. This will also reduce our dependence on imports to that extent.

Moreover the country has not yet attained the world average yield in oilseed production. It is lags far behind despite the fact that the potential has been underutilised. The current oilseeds productivity in India is 851 kilograms per hectare against world average of about 2,500 kilograms per hectare. The irony is there has not been any attempt to increase the yield. It is a well known fact that the Malaysian palm oil (exporters) lobby is making all out efforts to prevent any oilseeds imports to our country.

About 70 percent of country's RBD palm oil is imported from Malaysia.One would be surprised to note that in a bid to promote the local edible refining industry the Malaysian government has imposed an export duty of just 16.46 ringgits on RBD palmolein against 155 ringgits on export of crude palm oil and and 34.63 ringgits on export of crude olien.

But if one goes deeper it becomes clear that in reality the exporters of Malaysian RBD palmolein pay nothing in duties (export) since the value added products in this country are exempted from any such payment and refining oil is value addition.

On the other hand Indian government is acting in total contrast. The finished product comes to the country without any hindrance while the raw materials don't. Oilseeds are not allowed to import at all while import of crude palm attracts as high as 43 per cent duty plus another two per cent by way of surcharge which is almost 200 per cent more than the 25-percent-duty on import of finished edible oil.

According to trade circles, there is a tussle between the commerce ministry and the agricultural ministry. While the commerce ministry is in favour of oilseed imports, the agriculture ministry has raised the single issue of quarantine-meaning the imported seeds could be contaminated .

The ICAR scientists believe that the imported oilseeds might contain inherent pests or diseases that may go into sowing. But this is only an excuse say traders, who are of the view that the problems of such nature can be dealt with. There is a way out of plant quarantine issue. Let them import ricebran, sunflower seed, rapeseed `00' variety and other oil bearing material which are mostly by products of oilbearing seeds and do not go into sowing. These products do not fall under high PQ risk and thus are safe to import.

There could be counter checking steps like permitting it under actual user condition so that it is not diverted elsewhere.

As far as quarantine issue is concerned we did not have the problem in the years 1977 to 1979 when oilseeds were permitted to import. Moreover Japan and other European countries like Holland and Germany are still importing various kinds of oilseeds like soyabean, rape, linseed and using oil for their consumption of edible oil.

Besides, the government has been importing pulses for years together and without the problems such as pests, diseases, etc, as claimed by the agricultural scientists of our country, ever cropping up. In this case the pulses are directly consumed.

A major benefit of permitting imports of oilseeds will boost the country's foreign exchange reserves as the residual product, namely, oilcakes and oilmeals, can be exported.

Look at it this way, the landed cost of one lakh tonne of imported sunflower edible oil comes to around $56.5 million, so the net foreign exchange outgo would be the same. Now suppose to procure one lakh ton of edible oil one would need roughly say about 2.3 lakh tonne of oilseeds (at 43 percent oil recovery ), the landed cost of which comes to about $66.30 million. After extracting the oil from the oilseeds the leftover oilmeal amounts to 1.28 lakh tonnes which could again be exported at the price of say around $90 per tonne resulting in forex inflow of about $11.5 million. Thus procuring one lakh tonne of edible oil from imported oilseeds would save $1.7 million per lakh tonne.

What's more India can carve a niche in export of oilmeals and oilcakes which has tremendous demand overseas. The products are used as animal feed globally.

Presently India exports 4.3 million tonnes of oilmeals, annually bringing in $875 million of precious foreign exchange.

One can always raise a question on logistics. The viability of local oilmills dependent on imported oilseeds have to be taken into consideration. The oilmills situated on coastal areas may find processing of imported oilseeds cheaper because they save transportation costs when compared with the oil produced from domestic oilseeds which come from other parts of the country and add to the overheads.

So this leaves more availability of domestic oilseeds for the oilseeds processors situated around the place of this raw material. So these units become viable and also add to the availability of oil in the remote areas.

Certain corners may argue about loss of revenue to exchequer but it can be easily recovered by way of sales tax, octroi and other taxes that are levied by state governments on oilseeds and its processing.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.