Niti Aayog Advocates for Higher Import Duty on Edible Oils for Atmanirbhar Bharat

Niti Aayog has proposed that increasing import duties on edible oils and maintaining a significant duty difference between crude and refined oil could help India achieve self-reliance in edible oil production. The report, titled "Pathways and Strategy for Accelerating Growth in Edible Oil towards Goal of Atmanirbhartar," emphasised the importance of public-private partnerships to boost production. These partnerships can leverage private sector expertise in technology, marketing, seed production, and area promotion across all oilseed crops, including oil palm, with buy-back arrangements.

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India currently meets only 40-45% of its edible oil needs through domestic production. This shortfall poses a significant challenge to achieving self-sufficiency. The report highlighted that a higher import duty regime could protect domestic production, while a substantial duty gap between crude and refined oil would benefit processing industries. Aligning support prices with the import duty structure would support farmers, processors, and consumers alike.

Public-Private Partnerships

The report stressed the need for public-private partnerships to accelerate edible oil production. Utilising private sector expertise in areas such as technology, marketing, seed production, and area promotion is crucial. These partnerships can cover all oilseed crops, including oil palm, with buy-back arrangements to ensure stability.

A flexible tariff structure responsive to global market prices, domestic supply and demand trends, and the Minimum Support Price (MSP) for oilseeds offers a strategic approach. This structure would help balance the interests of farmers, processors, and consumers while promoting domestic production.

Current Consumption Trends

Over recent decades, per capita consumption of edible oil in India has surged dramatically. It has reached 19.7 kilograms per year, outpacing domestic production. This increase has led to a heavy reliance on imports to meet both domestic demand and industrial needs. In 2022-23, the import volume of edible oils reached 16.5 million tonnes (MT), representing a rise of about 67%. Palm oil dominates these imports at 59%, followed by soybean at 23% and sunflower at 16%.

The report noted that Open General Licenses (OGLs) are essential for enabling necessary imports to bridge the demand-supply gap for edible oils in India. Customised cluster technology should be developed to improve yield and establish Agro-Ecological Sub Region (AESR)-based crop-specific model farms to facilitate the horizontal spread of advanced technologies.

Boosting Domestic Production

Promoting large-scale captive plantations and dedicated oil palm seed gardens is crucial for boosting domestic edible oil production. Declaring oil palm as a plantation crop would streamline regulations and facilitate land allocation. This move would help increase the area under cultivation and improve yields.

The report also suggested that aligning support prices with the import duty structure will support farmers, processors, and consumers alike. This alignment would create a more balanced market environment that encourages domestic production while protecting consumer interests.

In conclusion, Niti Aayog's recommendations aim to make India self-reliant in edible oil production through strategic measures like higher import duties, public-private partnerships, and customised technologies. These steps are essential for reducing dependence on imports and ensuring sustainable growth in the sector.