56700963 indian edible oil industry report by anil

8/6/2019 56700963 Indian Edible Oil Industry Report by Anil

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Indian Edible Oil Industry

A report on size, structure and status of Indian edible oil industry

Prepared by-

RAJA PATEL

X Std.


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Indian Edible Oil Industry

The Indian edible oil economy is the worlds fourth largest after the US, China and Brazil,harvesting about 35 million tons of oilseeds against the world. Since 1995, Indian share in world

production of oilseeds has been around 10 percent. Although, India is a major producer of oilseeds, per

capita oil consumption in India is only 10.6 kg/annum which is low compared to 12.5 kg/annum in China,20.8 kg/annum in Japan, 21.3 kg/annum in Brazil and 48.0 kg/annum in USA.

Vegetable oil consumption has increased following a rise in household incomes and consumer demand. India imports more than half (54%) of its edible oil requirement, making it the worlds third-largest importer of edible oil. The country buys soya oil from Argentina & Brazil and palm oil fromMalaysia & Indonesia. Currently, India accounts for 11.2 per cent of vegetable oil import and 9.3 per centof edible oil consumption.

Oilseed cultivation is undertaken across the India in two seasons, in about 26 million hectares;mainly on marginal lands, dependent on monsoon rains (un-irrigated) and with low levels of input usage.Yields are rather low at less than one ton per hectare. Of the edible oil crops, only oil palm has the

potential to increase the yield per hectare, in a short time with YPH of 4 to 6 tonnes oil per hectare. Inaddition, unlike annual oilseed crops that need to be sown every year, oil palm has a productive life of about 25 years. This is the reason, Indian Govt. has allocated 300 crores in current budget year to promotethe oil palm cultivation and support the farmers during initial unproductive phase (4 years) of oil palmcultivation, this budget outlay would be continued for few more years to bring edible oil production tohigher level and reduce the dependency on imports from south Asia.

Types of Oils commonly in use in India:

India has a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut,mustard/rapeseed, sesame, safflower, linseed, nigerseed / castorseed are the major traditionally cultivated

oilseeds. Soyabean and sunflower have also assumed importance in recent years. Groundnut, soyabeanand mustard together contribute about 85 percent of the countrys oilseeds production. Coconut is mostimportant amongst the plantation crops. Efforts are being made to grow oil palm in Andhra Pradesh,Karnataka, Tamil Nadu in addition to Kerala and Andaman & Nicobar Islands. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important. In addition, oilseeds of tree andforest origin, which grow mostly in tribal inhabited areas, are also a significant source of oils.

The opening of Indias economy and increasing exposure to world trends in cuisine and other areas has slowly brought olive oil to the attention of health-conscious Indians. The growing popularity isshown in the increase in imports of olive oil, which has gone up from 2300 tonnes in 2007 to around 4500tonnes in 2008. Demand is estimated to increase to 42,000 tonnes in 2012, with the growing middle class

affluence and concerns about health and fitness.

Indian oil seed production scenario:

India is one of the largest producers of oilseeds in the world and this sector occupies an important position in the agricultural economy and accounts for an estimated production of 35 million tonnes of nine cultivated oilseeds during the year 2010-11 with a growth of 20% from 2006-07 production owing toactive promotion and support from Indian government. Fig. 1 shows the production of different oilseeds


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year Total Soybean Rapeseed Groundnut Castor seed RiceBran

2009-10 4500 3400 750 50 150 150

2008-09 5421.6 4177.3 840.9 54.8 203.9 144.7

2007-08 5442.1 3902.8 933.3 82.7 330.5 192.8

2006-07 5170.7 3661.9 970.7 83.6 202.2 252.3

2005-06 4423 3425 533.3 138 201.3 125.4

2004-05 2690 1862 590 122 71 44

Table 2 : Oil meal exports from India (,000 tonnes)

Statutory Regulations:

The Vegetable Oil Industry is administered through the following regulation orders which arestatutory in nature and derive their powers from the Essential Commodities Act: Vegetable Oil Products(Regulation) Order, 1998; Edible Oils Packaging (Regulation) Order, 1998; Solvent Extracted Oil, De-oiled Meal and Edible Flour (Control) order,1967.

Duty Regime:

Custom Duty: With effect from 1st April, 2008, the customs duty on crude and refined forms of PalmOil, Palmolein, Palm Kernel Oil, Soyabean Oil, Rapeseed/Mustard Oil, Sunflower Oil, Safflower Oil, Groundnut Oil, Coconut Oil and some other Vegetable Oils has been reduced to zero percent and7.5% respectively. The customs duty on all grades of olive oil has been reduced to 7.5 percent from the

previous 45 percent on virgin olive oil and 40 percent each on refined olive oil and olive pomace oil.

Import Duty: The import duty on crude edible oils has been abolished and duty on refined edible oilshas been lowered to 7.5%.

Value Added Tax (VAT): There are differences in the percentage rates and rules from State to Stateunder VAT for oilseeds, oil meals, oilcake and oils. There is an element of 4% VAT on edible oils /oilseeds plus octroi and other local taxes on edible oils imposed by the state governments, which accounts

to nearly 6 to 7%. The VAT on Olive oils is also charged at the rate of 4% by the Indian States.

Foreign Direct Investment Policy:

100% Foreign Direct Investment (FDI) is allowed in Indian vegetable oils and vanaspati industry throughthe automatic route. Moreover in the Food processing sector and the Private oil refineries sector 100%FDI is allowed through the automatic route.

Market Trends:


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Branded segment of edible oils has clocked the growth of 15% during last few years and has good prospects for the future. It occupies about 25% of total edible oil market. But it is not uniform all over India, The branded edible oil market tends to be fragmented based on regional tastes. For eg. Tamil Naduaccounts for about 50 per cent of the total sunflower oil sales in consumer packs. While soyabean is theoil of choice for consumers in Madhya Pradesh, Maharashtra, Bihar and Punjab, sunflower oil is

consumed mainly in the southern States and urban India, rapeseed in North, central and east India. While branded soyabean oil is growing at 20-22 per cent annually, the branded sunflower oil market isexpanding at 6-8 per cent. Major national players in this segment include Adani Wilmar, Ruchi Soya, ITCagrotech, KS oils, NDDB, Bunge etc.

Localization of the Industry:

India is one of the largest producers of oilseeds in the world. The oilseeds area and output is concentratedin Central and southern parts of India, mainly in Madhya Pradesh, Gujarat, Rajasthan, Andhra Pradeshand Karnataka.

Groundnuts:

India ranks second in the world (after China) in groundnut production. The three southern states of Andhra Pradesh, Tamil Nadu, Karnataka and the western state of Gujarat together account for close to80% of the annual output in India. Regional trends in groundnut production indicate that the recentincrease in groundnut yields has mainly occurred in Tamil Nadu due to increased irrigation. AlthoughTamil Nadu accounts for 12% of the total area under groundnuts, it contributes to 22% of the total

production.

Rapeseed-Mustard:

India ranks fourth (after China, EU and Canada) in the world in the production of Rapeseed. Almost 40 percent of the rapeseed output comes from the state of Rajasthan. Other major states include Uttar Pradesh (18%), Madhya Pradesh (10%) and Haryana (11%). Yield improvements have taken place in allthe major states although Haryana shows the maximum growth in yields in the last two decades.

Soybeans:

In India Madhya Pradesh is the leading state in producing soybean followed by Maharashtra, Rajasthanand Uttar Pradesh. On an average, Madhya Pradesh produces 74 percent of India's total soybean crop;

Maharashtra, 13 percent; and Rajasthan, 10 percent. The crop has exhibited a vast potential as a monsoonseason crop mainly in Central India, and is extending its coverage in the Southern parts of thecountry.


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56700963 indian edible oil industry report by anil

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