Brazil calls for greater bilateral trade with India

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Brazil has decided to make its exports of soybean oil and products cheaper by reducing its taxes and levies on production. Soybean oil is one of the major item exported by Brazil to India apart from copper and iron and steel manufactured products.

"In the backdrop of the rising global prices, we are thinking of reducing our taxes and levies on the production of soybean products for maintaining our exports," said the visiting Brazilian Minister of Development, Industry and Foreign Trade, Miguel Jorge.

India imports both refined soybean oil and degummed soybean oil. In 2006-07 (oil year November-October) India imported about 11,120 tonne refined soybean oil and 1,3322,920 tonne degummed soybean oil. Imports of refined soybean oil was higher in 2005-06, 2004-05 and 2003-04 being respectivelt at 20,457 tonne, 25,003 tonne and 15,324 tonne.

Similarly imports of degummed soybean oil was higher in 2005-06 and 2004-05 being respectively at 1,703,360 tonne and 2,001,745 tonne.

Soybean oil is a small part of the total vegetable oils import of around 4 to 5 million tonne, it has the potentiality to rise in near future. India has already allowed imports of soybean oil extracted from genetically modified (GM) seeds without being labeled, despite strong opposition from the anti-GM lobby.

Owing to a surge in demand, international prices of edible oils continued to exhibit a sharp and steady upward trend in recent months. For instance, the international price of crude palm oil (FoB Malaysia) increased from $ 770 per tonne in the last week of August, 2007 to about $ 1220 a tonne in the last week of February, 2008. During the same period, the international price of sunflower oil (CIF Rotterdam) increased from $ 947 to $ 1695 a tonne – an increase of about 79%.

India has made tariff cuts on a range of vegetable oils from time to time keeping in pace with the rising prices. It has also maintained a low tariff value for imports of vegetable oils. The duty on soybean oil is already low due to the low WTO bound tariff rate at 45%

According to the Solvent Extractors Association of India in the last four months, global prices have substantially increased and practically doubled in last one year. However this has had no impact on flow of imported vegetable oil into India.

Jorge said, "We would like to boost trade and investment opportunities between two our two countries. India and Brazil are among the top 10 economies and we are both fighting in the WTO in the interests of the developing world."

Jorge is leading a strong business delegation to India.

Asia represents 20% of Brazilian foreign trade, about $ 43.7 billion and the region is responsible for the recent surge in Brazilian exports. India represents only 1% of Brazilian trade flow.

"In 2007 on a year-on-year basis, our bilateral trade with India increased by 30% amounting to $ 3.1 billion. We need to accelerate our trade so that the target of $ 10 billion is reached by 2010," Jorge said.

In 2007, Brazil's exports to India was valued at $ 957.9 million and India's exports to Brazil was valued at $ 2,164.9 million. Diesel was responsible for 50% of India's exports to Brazil.

Stressing on the need to diversify the export-import basket, Jorge said, "Brazil would also like to export electric and electronic products, food, machine and equipment, transport materials and many other value-added products."