Edible oil industry bodies SEA and COOIT have demanded that the government should reconsider its decision to freely allow the import of refined palm oil and palmolein, saying unrestricted shipments will kill the domestic processing units.

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In a letter to Commerce and Industry Minister Piyush Goyal, the Solvent Extractors' Association of India (SEA) demanded that the import of RBD palm oil and RBD palmolein should be again put under the 'restricted' category.

"The industry is surprised and shocked by the decision of the government to freely allow the import of RBD Palmolein and RBD palm oil till December 31, 2021," SEA President Atul Chaturvedi said in the letter.

When contacted, Central Organisation of Oil Industry and Trade (COOIT) Chairman Suresh Nagpal said the domestic industry will be badly affected because of this decision.

"We also fear that imports of refined palm oil will increase from SAARC nations at zero duty," Nagpal said while demanding the rollback of this decision.

According to the SEA, the import of RBD palmolein and RBD palm oil was placed under a 'restricted list' from January 8, 2020, through a DGFT notification. As a result, the import of RBD Olein dropped from 27.3 lakh tonne in 2018-19 (November-October) to 4.21 lakh tonnes in 2019-20.

In the current marketing year, during the November 2020-May 2021 period, hardly 21,000 tonne have arrived in India. "We feel the concern in the government about the inflationary impact of high edible oil prices may be a little misplaced. The weightage of edible oil in WPI (Wholesale Price Index) is only 2.64293 percent and should not cause undue alarm," Chaturvedi said.

The government needs to balance the interest of farmers and consumers, he said. "High vegetable oil prices have been a blessing in disguise and would definitely attract more acreage in oilseed cultivation which is critical for reducing dependence on imports," the SEA president argued.

SEA said prices of vegetable oils have fallen 25 percent in the past two months. "Allowing free import of refined palm oils will not bring down prices but will kill the domestic industry," Chaturvedi said adding that refineries were already working at lower capacities and margins.

Since the past one and a half years, refined palm oils are in the restricted list which incentivised more investors in the industry, he added. "This action of the government will send wrong signals to the investors," Chaturvedi said.

The "opening up" by freely allowing RBD palmolein and RBD palm oil will have serious repercussions on farmers also, as this will have a dampening effect on the prices of domestic oilseeds, the letter said.

SEA said Indonesia's levy and export duty from July 2, 2021, on crude palm oil (CPO) is $291, while that on RBD palmolein (the finished product) is only $187 per tonne. Similarly, in Malaysia also, the export duty on CPO is $90 against nil of refined palm oils.

"This will also open the flood gates for import of refined oils from Nepal and Bangladesh under SAFTA agreement at nil duty, which will create havoc in our market, as domestic producers will not be able to compete with these oils imported at nil duty and the refiners in the northern and eastern India will suffer heavily," Chaturvedi said.

He, therefore, requested the government to withdraw the DGFT notification dated June 30, 2021, and place all refined oils under the 'restricted' category in the larger interest of the domestic edible oil refiners.