Concerns with Vegetable Oil Imports

What is the issue?

How import dependent is India in this regard?

What are the concerns?

Farmers - Oilseed growers in India are in distress as a result of increased imports.
The planted acreage has stagnated and the yields also continue to be abysmally low.
This is primarily because growers have no incentive to improve agronomic practices.
The marketability of the crop grown is also weak as the price support mechanism is nearly non-existent.
Market - Liberal policies with zero or low rate of duty and free market operations of the last 25 years have contributed to unfettered imports.
This has worked against protecting the interests of domestic growers.
About 10-15% of the current import volume is speculation driven.
It often represents stock transfer from Indonesia and Malaysia to India.
Huge inventories of as much as 2 million tonnes are often piled up in India, in turn affecting the domestic market.

What measures need to be taken?

Ceiling on veg-oil imports - A ceiling on veg-oil import will reduce the quantum of arrivals and support domestic producers.
Ceiling should come with the provision to review it every 6 months, depending on the exigencies of the situation.
Monitoring imports - Imports have to be closely monitored in terms of registration of contracts, tracking arrivals and so on.
This can help make the trade more transparent.
It can also help policymakers with real-time information for taking informed decisions proactively.
Reduce long credit period - Many Indian importers often enjoy a long credit period
They have 90-150 days for the payment of the value of the cargo to overseas suppliers.
This encourages over-trading and fosters an unending loop of imports.
Reducing the credit period could address this.
Dynamic tariffs - Import duties should be varied dynamically.
It should be fixed in a way so that imported oils are not cheaper than the MSP for domestic oils.

Source: Business Line