Edible oils trade body SEA on Wednesday urged the government not to tamper with the import duties or encourage PSUs to import edible oils at concessional duties in a move to contain domestic prices.
Mumbai-based Solvent Extractors Association of India (SEA), in a representation made to the PMO and concerned ministries, stated that any policy change to bring down edible oil prices by lowering import duty would send a wrong signal to oilseed farmers.
The SEA said that edible oil prices had moved up globally in line with other commodities due to the massive infusion of liquidity in the economies by various governments.
However, for far too long, the government has kept edible oil prices very low in the country, which has discouraged oilseed farmers, thereby increasing import dependence up to about 70 percent.
"This price rise will encourage the oilseed farmer to increase acreage and adopt better farm practices," it said.
Currently, mustard sowing is in progress, and it is likely that the government target of 12.5 million tonnes of mustard production may be achieved. "If our country is able to achieve 12.5 million tonnes of mustard production, it would give an additional 1.5 to 2 million tonnes of domestically produced mustard oil. Our Import dependence may come down," the SEA said.
That apart, edible oil constitutes a tiny percentage of the household budget, and a marginal increase in prices would have no material impact, it said.
Currently, soya and groundnut are ruling at 8-10 percent minimum support price, which will go a long way in helping improve farmers' income in line with the Prime Minister's vision of doubling farmers' income, it added.
"Keeping the above points in mind, we feel it would not be proper to tamper with reduction of import duties or encourage PSUs to import edible oils at concessional duties as it would be counterproductive and harm our long term national interest," the SEA noted. The trade body further reiterated that there is huge unutilized refining capacity in the country, and if prices rise beyond a biting point (not likely) for Indian consumers, the industry can supply refined oil to the government, which may be used for subsidizing the weaker sections of the society, it added.
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