India on 'mission' to reduce dependency on vegoil imports: Sunvin Group

Singapore — The Indian government is on a "mission" to reduce its dependence on vegoil imports and aims to increase the country's planting area and productivity by 25%, the CEO of Mumbai-based consultancy Sunvin Group said during a webinar June 11.

"The government is moving towards self reliance, increasing domestic availability of vegetable oil and reducing the dependence on imports to 50% from 70%, Sandeep Bajoria said during the "Sunflower Oil: Keep Trading" webinar hosted by APK-Inform.

"This will be done by facilitating local oilseed production," he said.

In order to fund the drive, the Indian government is considering the possibility of raising the import duty on vegoils, he said. The current import duty on crude palm oil is 41.25% including the social welfare cess of 10%, while for crude soybean oil, sunflower oil and rapeseed oil the duty is 38.5% with refined oils taxed at 49.5%.

"The import duty could be raised by 5% on all edible oils in the next few days" Bajoria said, adding that the Indian government is "actively looking into the proposal."

The Indian Ministry of Commerce and Industry could not be reached for comment.

In the marketing year 2019-20 (November-October), vegoil imports are forecast at 13.62 million mt, down from 14.91 million mt in 2018-19. With India in an extended lockdown, edible oil demand has seen the focus shift to competing soft oils typically used in home cooking.

However, in 2020-21 vegoil imports are expected to rise to 15.45 million mt, with palm oil imports up at 9 million mt due to increased consumption as the lockdown eases. Soybean oil imports are expected to remain flat at 3.4 million mt, and sunflower oil imports are expected to increase to 3.0 million mt from 2.7 million mt.

"The incremental demand will be met by rising domestic production," said Bajoria, adding that imports of vegoils are likely to be capped at 16 million mt for the next decade.

Bajoria also said that demand for palm oil has declined because 60% of that demand comes from the hotel, restaurants and catering segment (Horeca), as well as in fried food, biscuits and catering, areas that have been hit hard by the lockdown.

"Palm oil imports that were typically around 9.0 million to 9.3 million mt/year have reduced to 7.5 million mt," said Bajoria. "Monthly consumption dropped to 400,000 mt in March, April and May compared to a monthly average of around 800,000 mt."

An increase in domestic cooking saw soybean oil imports rise to 3.40 million mt from 3.09 million mt this marketing year, and sunflower oil imports up to 2.70 million mt, from 2.35 million mt the previous marketing year.

Bajoria said sunoil and beanoil imports have not fallen despite the coronavirus crisis because these are branded consumer packed goods. "India, the largest importer of sunoil, is not going to reduce consumption, and we might end up importing more than the previous year" he said.

"The Russian share of the Indian sunflower oil market is increasing drastically because of its competitive price," he said. Ukraine continues to be the largest sunflower oil exporter to India but its market share started to decline in 2019-20 due to competition from Russia and Argentina, said Bajoria.

Indian imports of Ukrainian vegoil in 2020-21 are projected to rise 8.7% year on year to 1.875 million mt. However, imports of Russian oil are expected to rise 15% to 750,000 mt and Argentinian sunflower oil also by 15% to 375,000 mt, cutting into Ukraine's market share. "Ukraine used to have a 90% share of the Indian market, but it has decreased to around 63%," Bajoria said.

The more competitively priced oil from Russia and Argentina is behind the increasing market share. On a CIF basis to India, Russian sunflower oil is priced at a $5-$10 discount to Ukrainian oil. Argentinian oil is priced at an estimated $15 discount to Ukrainian oil.

Bajoria is also president of the International Sunflower Oil Association.