MUMBAI, Jun 5: The ailing solvent oilseeds extraction industry said it has been hit hard by the 15 per cent hike in the excise on the foodgrade hexane slapped in the recent budget proposals announced last Monday. Effectively, this raises the excise duty on food grade hexane to 35 per cent.The industry had felt elated with the government's move to allow futures trading in oilseeds, oils and oilcakes and also with the effective steps to protect domestic oilseeds crushing and processing industry by exempting edible oils importer-trading community from the impact of the eight per cent non-modvatable import duty.
Foodgrade hexane, one of the vital solvents for the oilseeds extraction industry, comes under the motor spirit category and petrochemical products family as it is extracted from crude. Under the Food Control Order, 1967, the industry is under obligation to use only this solvent for extracting edible oils from oilseeds. While crushing oilseeds to extract edible oil, food grade hexane is added to theoilseeds. With a low heating temperature, it evaporates on heat treatment of the crushed oilseeds, leaving behind hexane-free edible oil and the de-oiled meal.
The major suppliers of foodgrade hexane are Hindustan Petroleum Corporation Ltd (HPCL), Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Madras Refineries Ltd (MRL).
Congratulating the government, in a letter to prime minister Atal Behari Vajpayee, and finance minister Yashwant Sinha, The Solvent Extractors' Association of India (SEA) president, Ajay Tandon, said: "The hike in excise on food grade hexane would make the industry unviable and also our exports of oilmeals will equally suffer as our competitiveness will further reduce in the international market."
"This additional excise burden will force more plants to close their operations," said BV Mehta, SEA executive director. "What is more, closure of some of the marginal units in the industry will further decrease the availability of edible oil in the country," heclaimed.
Annually, the industry requires around 1,20,000 kiloliters of foodgrade hexane. At the existing rate of 20 per cent excise (levied in 19996-97), the industry has been paying around Rs 24 crore to the exchequer. With the 15 per cent excise hike, this will increase the industry's burden by Rs 18 crore. For an industry already reeling under excess capacity, this is claimed to be a heavy financial burden.
The government has therefore, been requested to reconsider and withdraw the proposed hike on food grade hexane.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
