A sudden spurt in soybean prices has made Indian meal exports uncompetitive over the past one month, prompting exporters to forecast a 50 per cent decline in shipments this oil year (November 2017–October 2018). According to Indore-based Soybean Processors Association (SOPA), India's total soymeal exports skyrocketed to 2 million tonnes for oil year 2016-17 from a mere 320,000 tonnes during the previous year, when its shipment was hit due to crushing disparity. However, the country's growing soymeal exports are likely to be hit this year once again because of the lack of competitiveness. Soymeal has become expensive because of rising soybean prices. India's cost of soymeal production works out to $500 a tonne as against exports from Argentina and the United States at $400 a tonne. Therefore, Indian soybean meal is more expensive by $100 a tonne when compared to the rest of the world. "India has exported around 700,000 tonnes of meal between November 2017 and January 2018. However, further exports are impossible at the current uncompetitive price. Assuming that the current trend continues, India would not be able to achieve even 1 million tonnes of soymeal exports during the current oil year (November 2017-October 2018)," said D N Pathak, the executive director of SOPA. Meanwhile, soybean prices have jumped by 33 per cent after hitting a recent low of Rs 2,850 a tonne in December 2017. The government has raised import duty on a number of crude and refined vegetable oils.
While announcing Budget 2018, Finance Minister Arun Jaitley raised import duty on crude edible vegetable oils like groundnut oil, olive oil, and cottonseed oil, etc, from the existing 12.5 per cent to 30 per cent. The import duty on refined edible vegetable oils, however, has been raised to 35 per cent from 20 per cent.
"The increase in customs duty will enhance the 'Make in India' efforts of the government and give a major boost to the domestic edible oil processing industry," said Satendra Aggarwal, the chief operating officer of Ruchi Soya Industries Ltd. Apart from that, a social welfare surcharge of 10 per cent has been imposed on import duty and education cess has been withdrawn, which means net surcharge on import duty stands at seven per cent on customs duty. "We had requested the government to raise import duty on the variants of these vegetable oils to avoid future import. These oil variants are not currently imported into India. Hence, business is as usual for the edible oil industry here. Soybean oil, for example, is imported at 30 per cent of duty as against 12.5 per cent for cotton oil. Lower duty offered an opportunity for cotton oil imports. With today's hike in import duty, the chance for cotton oil import got eliminated," said Atul Chaturvedi, the chief executive officer of Adani Wilmar Ltd, which is the producer of the Fortune brand of edible oil. India imports over 16 million tonnes of vegetable oils annually to meet its growing demand of around 25 million tonnes. India's domestic production of vegetable oil is estimated at around 9 million tonnes. The government has also raised import duty on olive oil -- at 30 per cent on its crude and 35 per cent on its refined variants. Imported mainly from Europe, olive oil is consumed largely by the ultra-rich class of consumers as they can afford to pay the retail price of over Rs 1,000 a kg. Hence, the increase in import duty is not going to make any difference for the import of olive oil and other such price-worthy vegetable oil variants.