This shift is likely to have some impact on the infrastructure logistics of the country as most of the imported soft oils are required to be refined before it can be consumed, he added.

According to Mehta, a new trend of giving thrust to oilseeds imports against edible oils earlier is seen in the Asian edible oils market. This too will have a long-term impact on the global vegetable oils market and prices.

The share of palmolein imports during the last three months to January declined sharply to 45 per cent from over 70 per cent earlier, while that of soft oils has jumped to over 55 per cent from under 30 per cent earlier.

During the first quarter of oil year (November to October) 1998-99, India imported a total of 810,000 tonnes of edible oils against 17,50,000 tonnes in 1996-97. Of this, imports of palm oil isaround 360,000 tonnes (45 per cent) against 12,30,000 tonnes in the whole of 1996-97 (70 per cent), while the share of soft oils at 450,000 tonnes was 55 per cent against 520,000 during the whole of 1996-97.

The ratio of 70:30 remained even for 1997-98 oil year. It was only during the first quarter of this year that the edible oil ratio changed drastically to 45:55.

Mehta was to address participants at the two-day Edible Oils & Fats Logistics seminar to be held at Singapore from March 9-10. For some reasons, the seminar was called off.

In a speech prepared for the seminar, Mehta said: Refined oil, palmolein is a readily marketable product, whereas soft oils are statutorily required to be refined so as to conform to pre-set quality standards before they are sold for human consumption. The relative share of refined palmolein and soft oil in India's import basket will have some bearing on logistics but later on would provide processing job to refiners and is, therefore, preferable.

According to Mehta,till recently, because of the heavy emphasis on import of palmolein, the infrastructure facilities like storage and transportation had relatively less bearing on the market.

The current tank storage capacity in India is adequate. An index of the adequacy is provided by the tank rentals, which have declined from a peak of between Rs 250-450 per tonne per month (depending on the port location and facility) during 1996-97, to about Rs 100-250 per tonne per month, and most of the large importers also created their own tankages at the main importing ports.

"If oilseed imports are encouraged and do take place on a large-scale, I envisage there could be initial logistic constraints that Indian importers will have to tackle. These will relate to unloading of cargo, quarantine checks and storage (for bagging etc) within the port premises and movement of imported cargo to the processing unit. There are bound to be initial stresses and strains in the system, but I am confident that most of the problems will besorted out over a period of time."

Further, according to Mehta, if the duty on oilseeds imports is reduced to zero (now minimum 5 per cent) from 45 per cent currently, "I expect about 25-30 per cent of total edible oil imports to be replaced by oilseeds import."

A new trend is seen in the Asian market since the last season, Mehta said. "This may somewhat alter the vegetable oils trade equation."

China, one of the leading importer of edible oils, has recently effected a major policy shift in a manner that import of raw material, rather than finished product is encouraged. As a matter of fact, the Chinese government imposed a value-added tax of 13 per cent on soyameal import so as to encourage bean import that supports local processing industry.

China's rapeseed imports have surged phenomenally from nil imports in 1995-96 to 350,000 tonnes in 1997-98. For 1998-99 oil year, the projected imports are a mind-boggling 1.2 million tonnes.

Will India follow the Chinese example, asks Mehta, adding the recentrationalisation of duty structure on vegetable oils and oilseeds imports into India has the potential to change the composition of imports.

Since September 1998, the Indian government permits import of soyabean (in split form) as also sunflowerseed and rapeseed (subject to quarantine restrictions). The major obstacle to physical seed imports, however, is the "unconscionable level" of tariff (40 per cent ad valorem) which makes imports "completely unviable".