The domestic production of oilseeds has increased considerably while at the same time the international prices of edible oils have drastically fallen by around 30-45 per cent since September 1998.

In a recent letter to all the concerned ministries including the Food and Consumer Affairs, the finance ministry, the commerce ministry, home ministry, defence ministry and the agriculture ministry and SEA president Ajay Tandon said, "We request the government to correct the inverted duty structure. The duty on oilseeds should be at the lowest being raw material, medium on raw vegetable oils and highest on refined oils.This will achieve the objective of differential rate of duty to support domestic oilseed crushing and refining industry by having lower duty on raw material than finished goods."

Drawing the attention of all the ministers of the above ministries, Tandon said that various neighbouring countries have taken sufficient steps to protect their respective edible oils sector.

For example, Indonesia, last week reduced the export duty on palm oil and palmolein by 10 per cent to boost their exports. It is likely that Malaysia will also take similar steps.

Pakistan, in order to protect its own oilseed growers, has last week (Thursday) raised the import duty by Pakistan Rs 2,000 per tonne. Also, earlier in April 1999, Pakistan had raised the import duty by PK Rs 3,000 per tonne in the wake of fall in international price.

The current import duty on palm oil in Pakistan is PK Rs 9,850 and crude soyabean oil PK Rs 8,850 which works out to 50 and 40 per cent respectively over the CIF prices. In addition, there is 15per cent sales tax, four per cent income tax and 2.5 per cent octroi on import of edible oils in Pakistan. Thus Pakistan growers and the industry enjoy the protection of nearly 70 per cent.

Against this, Indian farmers have minimal protection of 20 per cent (16.5 per cent import duty and around 3-4 per cent local taxes. China too has effected a major policy shift in a manner that import of raw material, rather than finished product is encouraged. Recently the Chinese government imposed a VAT of 13 per cent on soyameal import so as to encourage bean import that supports local processing industry and production of vegetable oil domestically. "We therefore, urge the government once again to take steps similar to those taken by our neighbouring countries to regulate oils trade in conformity with domestic production and demand tough tariff mechanism," Tandon said in the letter sent to the various ministries.

"The government should introduce the concept of variable duty structure. If the prices falls below thelevel, duty could be increased and for higher level duty may be decreased considering the international prices of edible oil, domestic supply and the consumers' interest.