Budget 2020: Oil production in need of lubrication

Budget 2020: Oil production in need of lubrication

Simon George

By Simon George

Encourage oilseed cultivation

Indian vegetable oil consumption is currently pegged at around 23 Million Tons. The domestic production of oils is around 8 Million Tons and the gap of 15 Million Tons is bridged with imports. With annual consumption growing at around 3% and domestic oilseeds production being stagnant, the dependency on imports will continue to increase. Hence, the Government should encourage farmers to grow oilseeds and move away from growing wheat and rice this will have the benefit of higher oilseed production locally and improve the water tables where wheat and rice is being grown.

Increase duty differential to support domestic edible oil refineries

The Government of India has currently put import of refined Palm Oil and Palmolien under the restricted list. In the future, if the government opens the imports again, it will be important to increase the duty differential between Crude Palm Oil and RBD Palmolein to 15% from the current 7.5% in order to support domestic edible oil refineries.

One Agriculture Market

Ensure market reforms like APLM Act, E-NAM are implemented at the earliest and acts like Essential Commodities Act which have outlived their utility are either modified or done away with to make India one Agri market and help increase productivity, supply chain efficiencies & decrease cost to final consumers.

Eliminate Commodity Transaction Tax (CTT) on Agri Commodities

Indian Agricultural Commodity Futures market is still in the nascent stage and the imposition of Commodity Transaction Tax has impacted the development of this market adversely. Introduction of CTT on processed commodities such as sugar, soya oil, RBD palm oil, cottonseed oil cake, and guar gum has increased transaction costs, leading to a high cost of hedging for value chain participants on organized commodity derivative exchanges. The average traded volume is reducing as participants stay away due to high costs. Hence, CTT on agricultural processed commodities should be eliminated till the commodities market reaches a certain maturity level and then can be added in a phased manner.

(Simon George, President, Cargill India)