1. Challenges faced by Indian Crushing and Refining Industry and Way Forward By Dr. B. V. Mehta, Executive Director The Solvent Extractors’ Association of India (Premier Association of Vegetable Oil Industry & Trade) 22-23 Sept. 2016, Goa Globoil India 2016 1

2. Indian Vegetable Oil Industry Nos. of Units Annaual Capacity Mn./T Capacity Utilisatio n Oil Mills (Crushing Units)1500036.020-30% Solvent Extraction Plants60031.030-35% Vegetable Oil Refineries65024.040-50% Vanaspati (Hydrogenated Units)2503.025-30% 2 The major reason for under utilisation is shortage of raw materials for both crushing and refining. Indian Vegetable Oil Industry comprising of Oil Mills, S.E. Units, Refiners and Vanaspati Manufactures

3. Oilseeds Production (Trade Estimate) In last two years, situation has worsten due to failure of monsoon, resulted in to lower production. 3 Oilseeds production is stagnant and hovering between 20 to 25 million tons. Million Tons Year

4. Edible Oil Demand- Long Term Projection (Excluding Non-edible Oils) Year Population @ 1.76% Growth Consumption @ 3% Growth Consumption @ 4% Growth Consumption @ 5% Growth In Bn. Per Capita (In Kg) MnT Per Capita (In Kg) MnT Per Capita (In Kg) MnT 20151.2515.219.0015.619.515.919.87 20171.2816.020.4816.821.5017.422.27 20191.3117.022.2718.023.5819.125.02 20211.3418.023.7919.525.7021.027.72 20231.3819.025.2421.127.8023.230.56 20251.4220.226.7822.830.025.633.69 4 Indian demand for edible oil is rising by 5 to 5.5% per annum from present level of 20 million tonnes by one million tons per annum equivalent to 2.5 to 3.0 million tons of oilseeds (Average recovery 30%.)

5. Issues 5  Oilseeds production is stagnant, seriously affecting domestic crushing.  Currently import duty on crude oils attract 12.5% and refined oil at 20%. The import duty difference between crude and refined oils at 7.5% is not favourable to Indian Refiners to counter the export duty imposed by exporting countries.  This made import of refined palmolein more viable as compared to crude palm oil. Currently RBD Palmolein landed cost is more or less same or less than that of Crude Palm Oil.

6. Issues ……. 6  To make the matter worse last year GOI reduced import duty on by products viz. Palm Stearin and PFAD to Nil.  Since these by products constitute 25% of Crude Palm Oil, the disparity in the Indian refining further increased leading to lesser utilisation of capacity and facing financial crisis / verge of closure.

7. 7 Import of RBD Palmolein v/s. Total import of Palm Oil

8. 8 Current Trend Import of RBD Palmolein v/s. Total import of Palm Oil Nov,’15 to Aug.’16

9. Fall out of the Policy 9  Large scale of import of finished goods i.e. Refined Palm Olein has resulted in significant drop in the capacity utilization of the refining industry from 60% to less than 40%.  This has lead to a number of refining industries in India to shut down and becoming NPA’s.

10. Solution 10  Similar to the exporting countries namely, Indonesia/Malaysia, India should also encourage its domestic Vegetable Oil Refining Industry.  This can be achieved by increasing the differential duty between Crude Palm Oil and Refined Palm Olein from the present levels of 7.5% to a minimum of 15%.  This objective can be met either by increasing the import duty on Refined Palm Olein from present level of 20% to 27.5% or by reducing the duty on CPO.

11. 11 Palm Oil v/s. Soft Oils  The current duty structure, discourage the import of Palm Oil over Soft Oils.  Incremental growth in import is taken by Soft Oils at the cost of Palm Oil.  Export duty impose by Palm Oil producing countries discourages importing countries and force them to shift from Palm oil to Soft oils.

12. Import of Palm Oils v/s. Soft Oils 12 Year (Nov-Oct) Palm OilSoft OilTotal (RBD Palmolein + CPO + Crude Olein + CPKO) Soybean + Sunflower + Rape (canola) 2007-084,809,47186%798,93914%5,608,410 2008-096,535,44880%1,647,91220%8,183,360 2009-106,499,25574%2,324,08326%8,823,338 2010-116,547,08678%1,824,37322%8,371,459 2011-127,669,42477%2,312,04223%9,981,466 2012-138,292,43380%2,092,30620%10,384,739 2013-147,957,96068%3,660,37432%11,618,334 2014-159,536,90466%4,884,36734%14,421,271 2015-16 (Up to Aug.’16) 6,930,18458%5,106,64942%12,036,833 (Qty. in ‘MT)

13. There are four interested parties  Oilseed Farmer  Oilseed Crushing Industry  Veg. Oil Refiner  Consumer Way Forward 13

14.  Focus on productivity - Every drop more crop.  Government policy should be focused and time bound for raising production & productivity and assured price to the farmer.  Oilseed farmers be encouraged to increase their production and productivity to reduce import dependence and make additional quantity available to local consumption.  Encourage Oil Palm Plantation.  Encourage GM Cultivation for higher Producing. Way Forward 14

15.  Oilseed crushing industry should have better capacity utilization. To this goal, even import of oilseed/oilcake, Rice Bran be encouraged by reducing import duty from present level of 30% / 15% respectively to 5%.  Veg. Oil Refiners should be able to refine large quantity by having higher differential between Crude and Refined Oils.  Increase in the import duty and refined palm oil will not lead to increase in the next prices of palm olein to the consumer. This is due to the large surplus in the refining capacity and quick turn round of CPO to Refined Palm Olein (Less than 7 days). Way Forward ……. 15

16. Make in India Above all, it will establish the clarion call given by Hon’ble Prime Minister of ………. MAKE IN INDIA 16

17. Dr. B. V. Mehta Executive Director The Solvent Extractors’ Association of India A Premier Association of Vegetable Oil Industry & Trade in India ISO 9001:2008 Organisation 142, Jolly Maker Chambers No. II, 14 th Floor, 225, Nariman Point, Mumbai 400 021 Tel: (+91-22) 2202 1475. 2282 2979, Fax.: (+91-22) 2202 1692 Email: solvent@mtnl.net.in, Website:www.seaofindia.com File : I-127 – Globoil 2016-17 Presentation Date : 19 th Sept.,2016 17