Indian Edible Oil Market:
India is the world’s fourth largest edible oil economy, after USA, China and Brazil, with 15,000 oil mills, 711 solvent extraction units, and 264 vanaspati plants; and over 1,000 refineries employing more than one million people. The total market size is at Rs. 600 billion and import-export trade is worth Rs.130 billion. India being deficient in oils has to import 40% of its consumption requirements.
In most parts of the world, import duty on oilseeds is lower than that on oils. But, in India, it is higher: 40 per cent. That is why no import of oilseeds or oil-bearing material has taken place in India. The industry wants the duty to be lowered from the present 40 per cent to 5 per cent. Edible oils prices in the Indian market have crashed due to large imports by multinational trading houses.
In 1996, the Government set up a Technology Mission on oil seeds, to increase production of other oil seeds and oil, and to reduce dependence on imports. The strategy revolved around increasing productivity and encouraging winter (Rabi) crops. This led to a sharp increase in oilseed production driven mainly by rapeseed, sunflower, castor seed and soya. Oil seed production jumped from 6.1 m tonnes in the mid 80's to the current levels. Climatic conditions in India favor growing a variety of oilseeds. On the demand side, a growing population and vastly varied dietary habits have ensured a thriving market for edible oil in the country. In fact, there is a substantial demand overhang, which is expected to continue for some years. Unorganized, medium and small players dominate the industry. Hence, quality remains a concern.
An average Indian's yearly edible oil requirement has gone up from 7.0 kg in 1996-97 to 11.8 kg in 2000-01. Despite the variety of oilseeds grown in India, the country imports a substantial quantity of edible oil, which also works out cheaper. Allied factors contributing to imports are the higher cost of...