According to the top trade organization, the Solvent Extractors Association of India (SEAI), India's edible oil imports for the current oil year 2020-21 (November-October) are anticipated to be 13 million tonnes (mt) or 200,000 tonnes lower than the previous year.
“We do not expect any increase in demand for the current oil year (November-October) 2020-21,” said BV Mehta, Executive Director, SEAI, speaking on the ‘Palm oil market in India: Challenges and Opportunity' at the ‘World Palm Virtual Expo and Conference' on Wednesday.
Domestic consumption has been impacted
Mehta stated that Indian edible oil demand has been depressed as a result of Covid-19, but that high edible oil prices have also had an impact on domestic consumption. Because over half of India's population is middle or lower middle class, customers are price sensitive. In addition, local edible oil output has grown by 1 million tons in the previous year.
“We would not be shocked to see a lower figure of 13 mt or approximately 200,000 tonnes compared to last year,” Mehta added. During the oil year 2019-20, India imported 13.17 million tonnes of edible oil.
Furthermore, according to Mehta, overall oilseed planting was at 19.2 million hectares as of September 6, down 3% from the previous year. “At the start of the season, we anticipated that the acreage would increase. But, for the time being, the acreage will be around the same as last year,” he added.
Malaysia’s Palmolein
In response to the government's decision to allow RBD palmolein to be imported freely till December 31, Mehta predicted that 150,000-200,000 tonnes of refined oil per month will arrive in India by the end of the year.
“I am not saying it will reduce, but it may reduce,” Mehta said of the government's expected effort to lower the import tariff on edible oils. There are possibilities. Given the high price of edible oil, the government may lower the duty.”
The main reason for the government to consider lowering import duties is the high price. “However, we are still unsure since the fresh crops will be harvested in the next two to three weeks. Farmers' feelings may be affected as a result of this. However, the government must strike a balance between the interests of consumers and farmers. The government may cut the duty for a limited time,” he added.
Mehta said Malaysia had an edge over Indonesia in terms of demand and import prospects for palm oil. Previously, Indonesia had a two-thirds share of total imports while Malaysia had a one-third share. Mehta stated that things are now changing and that Indonesia charges a high export tariff and fee. Such actions have deterred Indian importers from buying from Indonesia, causing them to shift their business to Malaysia, he added.
