Bulk exports of edible oil unviable; groundnut oil may find some takers

Bulk export of edible oil is unviable for Indian exporters, as the country relies on imports to meet internal demand. Only a small quantity of groundnut oil can be exported.

The government last week removed the decades-old ban on export of bulk edible oils, except mustard oil. Earlier, it had allowed export of 100,000 tonnes of edible oil in small packets. The relaxation, however, is unlikely to benefit exporters much.

At present, India imports 9 million tonnes of crude palm oil annually for refining in local units or blending it with some other edible oils to make it cost effective. It also imports about 3 million tonnes of refined edible oil for direct consumption, in addition to another 3.5 million tonnes of soft oil and non-edible oil.

About 55 per cent of domestic demand is met through imports. This can go up to 60 per cent in years when seed output is scarce.

“As a nation, we rely on imports of edible oil. Hence, export of edible oil in bulk would not be possible, except perhaps a small quantity of groundnut oil occasionally,” said Atul Chaturvedi, chief executive officer, Adani Wilmar, the producer of the Fortune brand edible oils. 

India’s annual vegetable (edible and non-edible) oil import is about 15.5 million tonnes. It produces 6.5-9 million tonnes of oil from vegetables such as soybean, mustard seeds and sesame; of this a small quantity is used for medicinal purposes.

Total consumption of edible oil in the country is 25 million tonnes. According to the data compiled by the Indian Oilseeds and Produce Export Promotion Council (IOPEPC), in 2016-17, India exported 29,000 tonnes of edible oil, earning Rs 3.39 billion.

Some experts feel the removal of the export ban could help increase exports. 

Globally, about 97 per cent of oil trade takes place in bulk. Relaxation of the ban aligns India to international trade practices.

“With this move, Indian exporters are being provided level playing field since. Competing countries do not have any restriction on bulk packing,” said Suresh Ramrakhiani, chief executive officer, IOPEPC.

“We are hopeful that it will enable edible oil exports to grow. If that happens, oil-extraction units will produce more,” said IOPEPC Chairman Sanjay Shah, adding that farmer would benefit from higher prices.

If there is, however, a scarcity of edible oil in the country, the government might rethink its policy.