Q. Consider the following statements:

  1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
  2. The Government does not impose any customs duty on all the imported edible oils as a special case.

Which of the statements given above is/are correct?

  • 1 only
  • 2 only
  • Both 1 and 2
  • Neither 1 nor 2

Answer: (a) 1 only

Notes:
  • India occupies a prominent position in the world oilseeds industry with a contribution of around 10% in worldwide production.
  • But the demand for edible oils (extracted from oilseeds in addition to palm oil) is significantly higher than the domestic production, leading to dependence on imports (60% of requirement).
  • The government imposes customs duty on edible oils to safeguard the interests of the domestic oil crushing industry.
  • The duty on two major edible oils, namely crude sunflower seed oil and crude canola/ rapeseed/ mustard is 25 percent, while crude soybean oil attracts 30 percent duty.
State of Edible Oil Sector in India
  • Place in Country’s Economy:
    • India is one of the largest producers of oilseeds in the world.
    • Oil sector occupies an important position in the agricultural economy.
    • It accounts for the estimated production of 36.56 mt of nine cultivated oilseeds during the year 2020-21 as per the data released by the Ministry of Agriculture.
    • India is the world’s second-largest consumer and number one importer of vegetable oil.
      • The present rate of edible oil consumption in India surpasses the domestic production rate. Hence, the country has to rely on imports to meet the gap between demand and supply.
      • At present, India meets nearly 55% to 60% of its edible oil demand through imports. Therefore, India needs to be independent in oil production to meet the domestic consumption demand.
      • Palm oil (Crude + Refined) constitutes roughly around 62% of the total edible oils imported and are imported mainly from Indonesia and Malaysia, while Soyabean oil (22%) is imported from Argentina and Brazil and Sunflower oil (15%) is imported mainly from Ukraine and Russia.
  • Types of Oils Commonly Used in India:
    • In India, groundnut, mustard, rapeseed, sesame, safflower, linseed, niger seed and castor are the major traditionally cultivated oilseeds.
    • Soyabean and sunflower have also assumed importance in recent years.
    • Coconut is most important amongst the plantation crops.
    • Among the non-conventional oils, rice bran oil and cottonseed oil are the most important.
  • Export Import Policy on Edible Oils:
    • Import of edible oils is under Open General License (OGL).
    • In order to harmonize the interests of farmers, processors and consumers, Government reviews the duty structure of edible oils from time to time.