According to industry estimate, the total import of edible oil in the oil year, (November 1999 to October 2000) has been about 45 lakh tonne, the highest so far. Imports are reported in the first month of the current oil year ie November, 2000. Some analysts in the government are of the opinion that the effect of recent duty hike is yet to be felt in terms of prices firming up. They state that importers sensing likely action to be taken by the government by raising import duty had already imported huge stocks before the close of 1999-2000 oil year. A good amount of stocks were imported also before Diwali. There are, therefore, surplus stocks with the importers and traders. After these stocks are offloaded there are chances of edible oil prices firming up and the effect of duty hike in restricting cheap imports will be felt.

However, there are other analysts in the government who feel Malaysian government is likely to increase its support and subsidy to its exporters, to export edible oils, preferably RBD palmolien at competitive prices. If this happens then it will nullify the attempts of India to restrict imports by raising tariff. Also Indonesia is competing with Malaysia in exports of edible oils. There are chances of huge imports of soyabean oils in future mainly from US as the import duty on this commodity is at present 35 per cent and the government can hike it further to the extent of only 45 per cent which is the WTO bound rate.

Some analysts in the government are of the opinion that the India should demand raising of WTO bound rate for soyabean oil from 45 per cent to 300 per cent, that of rapeseed oil and cloza or mustard oil from 75 per cent to 300 per cent. As all edible oils, especially in their refined form are used extensively as cooking medium all over the country, there is a justification for having a common WTO bound rate for imports of these oils. This common bound rate will check the mixture of imported cheap oil with the highly priced ones. The only viable solution to restrict imports of edible oils is to encourage domestic production of edible and oilseeds. The production of oilseeds need more added attention. In the recent kharif season output of oilseeds has declined and was badly affected by droughts and floods in various parts of the country.

Farmers should be assured of more remunerative prices for oilseeds and market intervention operations should be done effectively in case of farmers going for distress sales, so that the terms of trade are always in favour of oilseeds growers. According to sources the Union ministry of consumer affairs, food and public distribution is in favour of allowing cheap imports of oilseeds by reducing import duty.

This will help the domestic industry to increase their capacity utilisation. But the agriculture ministry is opposed to the move as this will facilitate many genetically modified seeds to enter the country and farmers will be adversely affected due to cheap imports of oilseeds.