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SEA demands placement of oilseeds in zero per cent slab by GST Council
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Thursday, 22 June, 2017, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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The Solvent Extractors’ Association of India (SEA) demanded that the Goods and Service Tax (GST) Council place oilseeds in the nil slab, as they are essential commodities, akin to rice, wheat and sugar.
It has proposed to impose five per cent GST on oilseeds and oils, while oilcakes and oil meals (including rice bran and rice bran extension) were placed in the nil category, and blended oil and margarine were placed in the 18 per cent slab.
This was stated by Atul Chaturvedi, the association’s president, recently. He added, “Five per cent value-added tax (VAT) was levied on blended oil, a mixture of two oils. It should be placed in the five per cent GST slab, instead of the 18 per cent slab.”
GST will be rolled out on July 1, 2017, but over the last couple of months, the GST Council held a number of meetings to consider representations by various segments in the food and beverage industry.
“Our sustained efforts and personal meetings with Santosh Kumar Gangwar, minister of state for finance and senior officials in the ministry of finance have yielded positive results,” Chaturvedi said.
“The GST Council has agreed to reduce the rate of GST rate levied on blended oil to five per cent. Akshay Modi must be complimented for taking the lead and getting the GST on blended oil reduced to five per cent,” he added.
“We are still pursuing them to impose no GST on oilseeds and reduce the rate of GST on margarine,” stated Chaturvedi, who is also chief executive officer (agro), Adani Wilmar Ltd.
He added that the farmers’ agitation and the subsequent firing by the police, which resulted in the deaths of farmers in Madhya Pradesh’s Mandsaur district, had brought the plight of the Indian farming community in focus.
“Practically all newspapers and television channels are falling over each other in giving suggestions to end the misery of our peasants and doubling their incomes,” Chaturvedi stated.
“I am sure our government is also busy burning the midnight oil to find the solutions to the ills plaguing our agriculture. Without joining the debate, let us hope the agitation and the suicides of our debt-ridden farmers does not go in vain and a lasting solution to this agrarian crisis is found,” he added.
Monsoon dilemma
“The Indian Meteorological Department (IMD) had forecast that this year, the monsoon would be 98 per cent of the normal. However, so far, the rainfall has been erratic, and it is still hot in north-western India and several parts of central India,” Chaturvedi said.
“IMD, during the current year, has highlighted the peculiar progress of the monsoon, which can have far-reaching consequences for our oilseed crops,” he added.
“They have observed that because of this peculiar movement, the monsoon seems to be travelling directly from the south to the north, bypassing the central part of India,” Chaturvedi said.
“The monsoon is not developing in a normal way, and it is likely that the monsoon advance may bypass the important soybean-producing regions like Madhya Pradesh and Eastern Maharashtra, and they may not get adequate rains in June. This may delay sowing operations,” he added.
Fears of farmer shifting
“After two years of drought, the current year had witnessed oilseed production rebounding. However, the increase in production has not brought any cheer to our farmers, as the prices have collapsed below the minimum support price (MSP) levels,” Chaturvedi said.
“Probably, for the first time in decades, soybean, rapeseed and groundnut have moved below the MSP. The current price level is the lowest in the last five years, and the farmers are discouraged to sow the oilseeds in the kharif season,” he added.
“With a view to ensuring that the farmers do not lose interest in oilseed cultivation, the association has strongly pleaded to the Central government to raise the import duty on crude oil to 20 per cent and refined oil to 35 per cent as a short-term measure to support the price,” Chaturvedi said.
“In the meanwhile, to cool down the farmers agitation in the various states, the MSP of pulses, oilseed and cotton for the kharif season has been revised substantially. Groundnut prices have increased by Rs 230 to Rs 4,450; those of soybean have increased by Rs 275 to Rs 3,050, and those of sunflower seeds by Rs 150 to Rs 4,100 per quintal,” he added.
“Currently, the oilseeds are being sold below the MSP, and there is hardly any market intervention operation (MIO) to support these price levels. While we appreciate the government’s decision to raise the MSP to support the farmers, there is a urgent need to strengthen the procurement system, otherwise it will not benefit the farmers,” Chaturvedi said.
Sharp rise in import of refined oil
“The import of edible oil during May 2017 jumped by 30 per cent compared to May 2016 and overall import for the period between November 2016 to May 2017 is more or less the same for the last year,” Chaturvedi said.
“On the one hand, we had a record oilseed crop, and on the other hand, we are forced to import a larger quantity of vegetable oils. The main reason is that the farmer is reluctant to sell his produce below the MSP and holding back the seeds at his end,” he added.
“The industry is unable to pay a higher price to the farmers due to the large-scale import of edible oil at a lower duty and the disparity in processing. The government must regulate the inflow of refined edible oil imports through tariff measures to enable the market forces to pay a remunerative price to the farmers,” Chaturvedi said.
Options trading in commodities
“The Securities and Exchange Board of India (SEBI) deserves kudos for allowing the commodity exchanges to launch options trading in commodities. The combination of futures and options will provide market participants the benefit of price discovery of futures and a simpler risk management tool,” Chaturvedi said.
Vegetable fats in chocolate
“The association, for nearly two decades, was pursuing the concerned authorities to permit the use of vegetable fats in the manufacture of chocolates,” Chaturvedi said.
“Recently, the Food Safety and Standards Authority of India (FSSAI) issued a notification, permitting addition of vegetable fats (from sal, kokum, mango kernel, palm oil, mahua oil, dhupa, phulwara, dharambe, etc.) upto five per cent of the finished product,” he added.
“This will give a boost to the production of vegetable oils and fats manufactured from tree-borne oilseeds (TBOs), help the industry by way of a larger basket of raw materials and the tribals by way of an opportunity to collect a larger quantity of TBOs from the forests,” Chaturvedi said.
“M H Agrawal and Ashish Saraf, chairman and co-chairman, SEA Minor Oilseed Development Council, respectively, and B V Mehta, executive director, SEA, must be complimented for following up this matter tirelessly over the years,” he added.
Forthcoming events
The Feed and Feed Ingredients Conclave - 2017 is taking place at Hotel Conrad, Pune on July 15 and 16, 2017. SEA, jointly with the Compound Livestock Feed Manufacturers’ Association of India (CLFMA) and the All India Cotton Seed Crushers’ Association (AICOSCA), are organising the event, which will focus on the future outlook for feed industry vis-a-vis demand for and supply of oilmeals, maize and other feed ingredients.
The fourth International Conference on Rice Bran Oil 2017 (ICRBO), organised by the International Association of Rice Bran Oil (IARBO) - formed by China, India, Japan, Thailand and Vietnam - is taking place in Bangkok, Thailand, on August 24 and 25, 2017. It features a line-up of speakers, whose topics will be concerned with rice bran oil and value-added products. It will provide an opportunity to those who are involved in the rice bran oil business to participate and to develop their international contacts.
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