The oilseed crushing sector has urged the government to reduce the import duty on the crop from 30 per cent to five per cent.
Oilseed production in the country is declining consistently because of climatic conditions and farmers switching to alternative crops. Output has slumped 19 per cent to 26.68 million tonnes in July 2014-June 2015 from 32.84 million tonnes in 2010-11.
Stagnant productivity coupled with crop damage has lowered yields despite several government initiatives. The government has been raising the minimum support price of oilseed every year to encourage farmers to bring more area under the crop.
"Efforts at increasing oilseed output have been inadequate. The time has come to exempt oilseed from import duty," said B V Mehta, executive director, Solvent Extractors' Association. The association has urged Finance Minister Arun Jaitley to reduce the import duty on oilseed to five per cent from 30 per cent.
Edible oil imports have grown at a compounded annual rate of 7 per cent to 14.42 million tonnes in 2014-15 from 9.98 million tonnes in 2011-12. There has also been a sharp decline in oilmeal exports from 5.6 million tonnes in 2011-12 to 2.47 million tonnes in 2014-15. Oilmeal exports are likely to decline to below two million tonnes during November 2015-October 2016.
"We have lost heavily in oilmeal exports at a time when its global demand is increasing. With growing demand from India as bird and animal feed, we will soon start importing oilmeal," said Atul Chaturvedi, chief executive officer, Adani Wilmar, producer of the Fortune brand of edible oil.
According to the commerce ministry, the foreign exchange outflow because of rising edible oil imports and declining oilmeal exports has increased from $7 billion in 2011-12 to $9.65 billion in 2014-15. The average capacity utilisation of Indian oilseed crushing units has declined to 30 per cent. Negative margins for the past several years have led to many small and medium units shutting down.
