Sunflower oil from Nepal making its way into Indian markets, shortly after soybean oil imports into the country’s eastern and northern markets raised deep concern for the Solvent Extractors’ Association of India (SEA).
Erode, in Tamil Nadu, has become a big centre for Nepalese refined sunflower oil, which is currently trickling down to Chennai as well.
“The oil sourced from Nepal penetrating the south Indian markets is way cheaper and impossible to compete with. This will eventually, lead to the closure of small and medium-sized refiners in the area,” said B.V. Mehta, Executive Director of SEA.
The SEA has been raising concerns about the massive imports of soybean oil from Nepal of late and the impact on the vegetable oil refining industry of the country. It is now addressing the issue of sunflower oil after one of its members TN Edible Oils Pvt Ltd pointed out that merchants have been buying finished items from Nepal and simply changing the stickers.
They have been promoting the oil beneath their very own model at absurdly low prices. TN Edible Oils has been processing nearly 200 ton per day sunflower oil refinery for the past three decades in Chennai.
According to industry sources, traders are willing to supply loose oil in tankers at prices that are at least Rs 8,000 a ton cheaper than the prevailing wholesale market rate in Chennai.
Under the SAARC Asia Free Trade Agreement (SAFTA), sunflower and soybean oils are imported into India duty-free. However, the rules of origin stipulate that a minimum value of 20 percent must be added to a product if it is not grown or produced there.
India’s edible oil industry claims that 20 percent value-added is not being applied in Nepal as the country claims that value-added standards are being met under the Indo-Nepal Treaty.
“Massive influx of edible oil from Nepal into India flouting rules of origins, will not only hurt domestic refiners, farmers but will also lead to loss of revenue for the exchequer,” said SEA President Atul Chaturvedi.
The government of course, needs to find a solution to this problem especially at a time when edible oil prices in India are skyrocketing.
“In light of this, SEA has mooted, at least for soyabean oil imports that it be channelised by means of a public sector agency (PSU) like NAFED,” says Chaturvedi.
In a letter to the government, SEA has said that channelling zero duty edible oil import from Nepal through a PSU would be very beneficial, because without having to lower the overall import duty for the country, this step would help to regulate the market and ensure that the suffering poor consumers have access to cheaper edible oil.
Further, to check excessive import, SEA also suggested that the Government fix a quota for the import of refined oils from Nepal, and distribute them month-wise / region-wise. This will have minimum impact on the domestic refinery industry, said Chaturvedi in the letter.