Ban imports of GM soyaoil, re-negotiate WTO bound tariff

Updated: Feb 23 2002, 05:30am hrs
The government should ban the imports of edible oils extracted from genetically modified (GM) soyabeans. At present, the government policies are severely constricted to check the massive inflow of soyabean oil into the country due to the low WTO bound tariff rate of 45 per cent. This low tariff rate acts as a damper to recovery in prices of indigenous oilseeds and edible oils and the desired objectives of raising peak duty are not fully realised. The only option left is to ban imports of GM soyabean oils.

In European Union, there are restrictions on imports of GM foods and oil meals. At the time of the negotiations for the Uruguay Round in 1994, GM foods was hardly a relevant issue. The US, Argentina and Brazil started commercialising GM soyabeans in a big way after 1994 and are in an advantageous position in terms of productivity and exports. India should take up the issue for an upward revision of bound tariff rate on soyabean oil at the WTO. But pending this exercise there should be a ban on imports of GM soyabean oil. If for some reason it is not feasible, a tariff rate quota for import of 1,50,000 tonne of soyabean oil against the existing 45 per cent duty should be imposed. Soyabean oil can also be imported against the applied tariff rate for other edible oils.

With the exception of soyabean oil, the import duty structure on all other edible oils arrived at in the Union Budget 2001-02 should be restored. Subsequent reductions done on import duty on crude palm oil in October 30, 2001, and on crude sunflower oil and safflower oil and refined mustard and rapeseed oil in November 16, 2001, should be withdrawn. By narrowing down the duty difference between crude and refined oils in the last Budget, several distortions and anomalies had been eliminated. This duty difference should not be widened further as it would result in serious distortions and malpractices like mis-branding, mis-declaration and misuse leading to loss of revenue to the exchequer without any benefit to consumers.

As there is no immediate prospects for a substantial increase in domestic oilseeds production, import duty on oilseeds should be reduced to 15 per cent. This would help the industry to utilise their idle capacity and farmers will not be affected as the current landed cost of oilseeds against 15 per cent duty will be higher than the MSP. Import duty on oilseeds can be suitably adjusted in future to ensure that the landed costs are not below MSP. Besides, separate oilseeds and oil development fund be created.

Money credit scheme for usage of non-traditional oils in soap manufacturing should be restored. Excise rebate @ Rs 2,800 per tonne of soap using all types of edible oils should be granted. Soap sticks, acid oil, spent nickel catalyst, oxygen byproduct, fatty acids, gums and wax should be exempted from excise duty. As exports of deoiled cakes face competition, food grade hexane and diesel should be exempted from excise.

(The writer is the Executive Director, Central Organisation For Oil Industry & Trade)