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Harish Damodaran

"Under the present liberalised trading environment, it is not desirable to allow state-owned trading companies to import at a lower duty, since this would discriminate against the private trade. In any case, RBD palmolein imports are under the open general licence," Ministry officials pointed out.

NEW DELHI, April 5

THE Finance Ministry has rejected a proposal to allow State Governments to import RBD (refined, bleached and deodorised) palmolein at a concessional rate of duty for the public distribution system (PDS).

"There is no move to permit import of RBD palmolein at a lower duty, though we have received requests from some State Governments," the Revenue Secretary, Mr C.S. Rao, told Business Line.

Earlier, a high-power committee (HPC) headed by the Cabinet Secretary, Mr Kamal Pande, is understood to have given an in-principle clearance for allocating 20,000 tonnes of RBD palmolein to Gujarat, with the entire quantity to be imported at a concessional duty.

The committee is said to have also considered allocating a total quota of up to 1.5 lakh tonnes to all States, including West Bengal and Andhra Pradesh, which had similarly demanded duty concession on RBD palmolein imported for the PDS. The HPC subsequently referred the matter of fixing the concessional duty to be applicable to the Finance Ministry.

The Finance Ministry, however, has ruled out granting any duty concession on the PDS palmolein, which will have to be imported (on the behalf of States) by the State Trading Corporation (STC) or other parastatals. Currently, the import duty on RBD palmolein works out to 92.4 per cent, inclusive of a basic customs duty of 85 per cent and the 4 per cent special additional customs duty component.

"Under the present liberalised trading environment, it is not desirable to allow state-owned trading companies to import at a lower duty, since this would discriminate against the private trade. In any case, RBD palmolein imports are under the open general licence," Ministry officials pointed out.

But the real reason for the decision not to permit concessional imports is said to be opposition from the Agriculture Ministry, which fears that it would tantamount to a `backdoor' duty reduction benefiting the Malaysian palm oil industry at the expense of domestic oilseed growers.

"1.5 lakh tonnes of imports is not a small quantity. Considering the state of the PDS today, it is very likely that much of this quantity imported at below normal duty will flow into the market, depressing prices at a time when planting for the kharif season is just about to begin," Krishi Bhawan sources said.

Malaysia, they added, has for long been lobbying for a reduction in duty levels, which now range from 65 per cent on crude palm oil (CPO) and crude olein to 92.4 per cent on RBD palmolein. In fact, during his recent visit in end-February, the Malaysian Minister for Primary Industries, Dr Lim Keng Yaik, had even offered to `work out a mechanism' for supplying palm oil at a concessional price to Gujarat.

The Minister also mentioned that Malaysia would be sending a team to Gujarat to `discuss' the issuer further. Interestingly, the HPC's meeting took place immediately after the Minister's visit. "They are exploring every option, including the PDS route, to push palm oil sales here," the sources said.

During the 2001-02 oil year (November-October), the country is estimated to have imported 44.25 lakh tonnes of edible oil, with palm oil accounting for 29.30 lakh tonnes or 66 per cent (18.91 lakh tonnes of CPO, 9.20 lakh tonnes of crude olein and 1.19 lakh tonnes of RBD palmolein). In the current oil year till February 2003, palm oil imports aggregated 9.09 lakh tonnes, compared to 8.95 lakh tonnes during the corresponding four months of 2001-02, even as total edible oil imports rose from 10.78 lakh tonnes to 11.27 lakh tonnes.

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