Currently, in the absence of any notification on import duty, the basic import duty of 40 per cent plus five per cent countervailing duty (as specified in chapter 12 of Custom Tariff) is applicable. This makes import of oilseeds unviable. Import of oilseeds was permitted on October 15, 1998.

As part of its pre-1999-2000 budget memorandum, the Solvent Extractors' Association (SEA) has pleaded the government to `take immediate rescue measures to save the domestic vegetable oil industry from collapse'.

Included in its demands, SEA has sought restoration of excise duty exemption for soap stock, acid oils, spent nickel catalyst and by-production oxygen gas; exemption of various duties on packing raw materials and the machinery used for packing edible oils; rationalisation of tax structure on oilseeds derivatives andrevision of minimum weight condition by railways for oilmeals.

After repeated pleas from the industry, the government had for the first time permitted, on October 15, 1998, import of soyabean seeds in split form. It allowed import of rapeseed and sunflower under open general licence (OGL), subject to quarantine department's requirements. Import of ricebran, though permitted, the government is yet to clarify import duty and quarantine checks.

Compared to import duty of 10 per cent, plus five per cent countervailing duty (CVD), on edible oil (finished product) the import duty on raw materials (oilseeds and oilbearing material) is high (at 40 per cent plus five per cent CVD). This makes import of oilseeds unviable, which in turn creates shortage of the much-required raw material and leading to sickness in the industry.

Also, over the last four years, import duty on edible oil has been reduced from 65 per cent to 15 per cent resulting in large scale import of edible oil, mainly palmolein.

The domesticvegetable oil industry comprises of over 50,000 oil expellers, 600 solvent extraction units 190 vanaspati units and about 400 refining units. The total installed capacity of the industry is around 30 million tonnes. However, capacity utilisation has shrunk to around 35 per cent.

Since last five years the inflation is under check, says SEA note to the finance minister. However, the vegetable oil industry's cost of input has gone up. Because the industry is forced to borrow from banks at high rates of interest, it is finding it difficult to service the high cost of debt. As a result, many solvent extraction units have been forced to close down their operations or are only partially operating.

Therefore, it is most justified to have import of oilseeds and oil bearing materials at nil duty.

Crushing of groundnut, rapeseed mustard seed and sesame seed that account for about three-fourths of the annual oilseeds production in the country, has been reserved for expeller processing in the small scale industry."Time has now come for serious rethinking on the reservation policy," the SEA note said.

According to SEA, neither machinery modernisation nor technology upgradation have received the attention it deserves. This has resulted in low recovery and poor quality of oil and wasteful use of energy. The reservation of crushing of oilseeds for the small scale sector employing expellers accords ill with overall policy of deregulation under the liberalisation regime. It is high time therefore, the government decide on dereservation of major oilseeds. This will greatly help speedy modernisation of vegetable oilseeds processing industry and accelerate the overall growth of the industry in the larger interest of the country.