Edible oil in India

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Context:

The Union Minister of Agriculture applauded the decision by the union cabinet to increase the import duty on edible oils.

More on News:

• The Union cabinet increased the import duty on edible oils from 0% to 20%.
• If other components are added, the total effective duty on imported edible and refined oils will be 27.5%.
• The Union cabinet also removed the minimum export duty on Basmati rice and increased the basic duty on refined oil to 32.5% with the aim of supporting local oilseed farmers.
• The Centre had reduced the export duty on onions from 40% to 20% by which the onion farmers will get good prices for onions and exports will also increase.

Status of Edible Oils in India

Oil Seed Production in India:

• Domestic Production of Oilseeds and Edible Oils Production Growth increased from 11.3 million tons in 1986-87 to 41.35 million tons in 2022-23 as per 1st Advance Estimates released by the Ministry of Agriculture.
• India contributes about 5-6% of the world's oilseeds production and India is the fourth largest oilseeds producer in the world.
• It has 20.8% of the total area under cultivation globally, accounting for 10% of global production.

Domestic production shares of different edible oils:

Area under oilseeds in India:

Regional variation in Edible oil production in India:

• The largest oilseed-producing states in India include Rajasthan, Madhya Pradesh, Gujarat, Maharashtra, Haryana, Uttar Pradesh, West Bengal, Karnataka, Tamil Nadu, and Telangana.
• Out of these states, Rajasthan, Madhya Pradesh, Gujarat, and Maharashtra were the top producers during 2021-22 with a share of about 23%, 21%, 18% and 16% of the total production, respectively.

Export and Import Figures:

Exports:

• The export of oil meals, oilseeds and minor oils was about 3.46 million tons in the financial year 2022-23 valued at Rs 14,609 crores.
• India’s major export destinations for groundnuts are Indonesia, Vietnam, Philippines, Malaysia, Thailand, UAE, Bangladesh, Iran, China, Afghanistan, etc.
• The niger seeds are majorly exported from India to the USA. Other countries such as Mexico, UK, Belgium, Algeria, Canada, Spain, Iran, Greece, and Netherlands are among India's top niger seeds destinations. The above-mentioned countries and the USA account for about 97% of India’s total exports.
• India exports sesame seeds to more than 125 countries. Some of the top sesame-importing countries are South Korea, the USA, Russia, China, Indonesia, Israel, Vietnam, Taiwan, Iran, and Canada.

Imports:

• 57% of domestic edible oil demand is met through imports.
• Palm oil constitutes about 59% of these imports.
• India imports palm oil from Indonesia, Malaysia, and Thailand, and soy oil and sunflower oil from Argentina, Brazil, Russia, and Ukraine.

Refer the following chart for importing countries of edible oils:

Data based on 1st advance estimates declared by DACFW released on 27.10.23

Steps taken by the Government:

Revamped schemes:

• The Technology Mission on Oilseeds (1986) was revamped into the National Mission on Oilseeds and Oil Palm (NMOOP) in 2014.
• Revamped National Food Security Mission (2018-19) was merged with incentives for seed, farm implements, and water application tools to boost oilseed production.

Economic Liberalisation:

Shift towards a more competitive market with reduced government control and increased participation of domestic and multinational players.

Export-Import Policy on Edible Oils Import Policy:

Edible oil import is under an Open General License. Import duty adjustments to balance the interests of farmers, processors, and consumers.

Open General Export License (OGEL) in India ●An export licence issued by the Indian government to domestic suppliers. The Department of Defence Production handles the application process and grant of OGELs. ●The OGEL allows the export of specified items to specified destinations without the need for export authorization during the validity of the OGEL.

Recent reductions in import duties:

• Crude Palm Oil, Crude Soybean Oil, and Crude Sunflower Oil: Basic duty reduced from 2.5% to Nil; Agri-cess at 5%.
• Refined Soybean Oil and Refined Sunflower Oil: Basic duty reduced from 32.5% to 17.5%.
• Refined Palm Oils: Basic duty reduced from 17.5% to 12.5%. Duty reductions extended until March 31, 2025.
• Current Policy Status: Free import of Refined Palm Oils are extended until further notice.

 

Management of Edible Oil Scenario in India: The Edible Oil Division under the ministry of Food and public distribution coordinate the management of edible oils in the country through a multi-pronged strategy, namely: ●After an assessment of the domestic demand and its availability from domestic sources, the mismatch of demand and supply is met through the import of edible oils. ●The Division also closely monitors prices of edible oils both in the domestic and in the international market and initiates necessary policy measures whenever necessary.

Important links

Palm Oil

National mission on edible oils

Sources:

https://epaper.thehindu.com/ccidist-ws/th/th_international/issues/99456/OPS/GKEDB4ID9.1.png?cropFromPage=true

https://dfpd.gov.in/Home/ContentManagement?Url=edible_oil_scenario.html&ManuId=3&language=1

https://www.indiafilings.com/learn/open-general-export-licences/

 

PRACTICE QUESTION Q.India faces the challenges in achieving self-sufficiency in edible oil production. Discuss the policy measures which the government has taken so far to address these challenges and enhance domestic production? (250 words)