Edible oil imports up by 73% year on year.

BANGALORE: India’s edible oil imports during the first six months of the current calendar year soared by 73% year on year as fears of an increase in customs duty weighed on importers’ minds forcing more global purchases.

Data from the Solvent Extractors Association of India(SEA of India) indicate that the country imported 4.29 million tonnes of edible oils during the Jan-June period compared to 2.47 million tonnes during the same period in CY2008. “The fact that no action was taken in Union Budget to impose import duty coupled with low prices will encourage larger import in coming months,” the SEA of India media release warned.

India which imports over 50% of its annual edible oil requirements will have to heavily depend on imports if monsoon continues to play truant, said Mr Krishna Reddy, commodity analyst with broking house Way2Wealth.

“The other emerging concern pertains to the potential inflationary threats due to surging primary food articles prices. The delay in monsoon and its uneven spread is a cause for concern as it is likely to weigh on agriculture growth and could be a potential downside risk to economic recovery,” said Mr Kaushal Sampat, COO, Dun & Bradstreet

Estimates indicate that the country is currently facing a 36% monsoon deficit. The Indian Meterological Department estimates that India would receive 93% of it normal rainfall during the ongoing kharif season.

Attention among policy makers, traders and consumers at large is focussed on how monsoon pans out in the north notably in the states of Gujarat and Madhya Pradesh which are the key producers of groundnut and soyabean respectively.

Edible oil imports in the ongoing oil year(which ends in October) is placed at 5.53 million tonnes against 3.09 million tonnes. Given the initial disparity in duty structure close to 79% of edible oil imported during the ongoing oil year are palm oil(including crude palm oil, RBD palmolein, crude olein, crude palm kernel oil) with the balance being soft oil(soya oil and sunflower oil). It was as recently as March 2009 that the Union government decided to scrap the 20% customs duty levied on soya oil. Palm oil imports are duty free.