Industry Seeks Easier Refined Palm Oil Imports To Cut Prices During Lockdown

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Importers of refined palmolein have asked government allow free import of refined palm oil so that poor people can get cheaper edible oil during Covid-19 lockdown which has disrupted the economy and purchasing power of people.

During the lockdown, prices of edible oil have risen by 10%.

All India Liquid Bulk Importers & Exporters Association (AILBIEA) on behalf of refined palmolein importers has sent several representations to Commerce minister Piyush Goyal and other authorities seeking easier import norms for the refined oil.

“Refined Palmolein is basically being consumed by poor people. But after restricting the import, only crude palm oil is being imported, which then gets refined at domestic refineries before getting packed and sold as branded oil. The price of branded oil is not affordable,” said Pradeep Ghorpade, consultant to refined Palm Olein importers. He added the refined Palm Olein is imported and immediately gets packed by small importers and directly sold at affordable prices.

In January this year, the government stopped free import of refined Palm oil, and put it in restricted category, which means import can be allowed only through licenses issued by foreign trade directorate. Later in April, the government made some changes, which industry executives say have further tightened the curbs on import of refined palm oil by putting more conditions for the inbound shipments of the commodity. As per new conditions, applications for import authorisation should be accompanied with pre-purchase agreement and details of the import for past three years.

Ghorpade said that if the government decides not to free up import and continue ‘licensed import’, it should restrict issuing licenses to genuine importers based on past performance.

“Licenses should be issued to an organisation selling a major part of its products to packaging companies. It should not be given to brokers and those who don’t posses proven business record,” he said.

The annual consumption of edible oil is around 22 million tonnes, of which requirement of 15 million tonnes is met through imports and remaining via domestic production.

“Out of total imports refined palm Olein would comprise around 18%. Since refined oil directly gets packaged and sold in retail, prices are comparatively much lower than branded edible oil which is generally imported as crude and then refined at domestic refineries,” he said.

Ghorpade also pointed out that due to national lockdown the prices of refined Palm oil have started rising in port areas where there is transport available since there is a shortage of crude palm oil.

“Imported crude palm oil cannot reach refineries and further to the consumers. The current restriction on the import of refined Palm oil has created a situation wherein we are heading towards an overall shortage of refined edible oil. This shortage will result in retail price spiking,” Ghorpade said.

AILBIEA also contested that the prices of edible oil are on the rise due to lack of competition from imported refined Palm oil.

In its representation, the body pointed out that domestic refiners are gaining refining margin on RBD Palm Olein. The landed prices of crude Palm oil are stable. Transportation comprises the variable cost.

The total refining capacity in India is 6.5 million tonnes, out of which 3.2 million tonnes are near the port where crude oil is imported.

“Refiners along the ports of the east coast are earring a margin of Rs 4,500-5,000 per tonne while those along the west coast are making an additional margin of Rs 1,500-1,900 a tonne,” Ghorpade said.

He said the government should intervene to check the price rise by ensuring a competitive environment for the refiners.

“We request the government to take cognisance of the matter and take suitable action to ensure fair competition which will keep prices under check and control inflation as well,” Ghorpade said.


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