Imports will either be lesser by 3% compared with the 2019-20 oil year or may go up by 5.3%, depending on when India comes out of the outbreak of Covid-19, traders and industry executives said.
Compared with 2018-2019, when the country had purchased around 15 million tonnes of edible oil from abroad, imports will be lower by as much as 14% this year ending October 31, 2021, they said.
In the current oil year, the industry is expecting imports to range between 12.9 million tonnes and 13.9 million tonnes. In the last oil year, India had imported 13.2 million tonnes of edible oil.
Talking to ET, BV Mehta, executive director of the Solvent Extractors’ Association of India, said: “Indian edible oil demand continues to remain subdued due to Covid-19. The high price of edible oil is also affecting consumption. In 2020-21, consumption may come down if the Covid-19 situation continues.”
Imports of soyabean and sunflower oil will especially get affected in 2020-21, as prices of these oils have shot up 35-40% this year. Though the government has reduced duty on imported palm oil to 27.5% from 37.5%, sunflower and soya oil still attract a high duty of 35%. “The government is in a dilemma to reduce the duty on edible oils in the near future,” Mehta said.
Due to a sudden increase in the prices of edible oil, particularly sunflower oil, a certain category of consumers, mostly the HoReCa (Hotel/Restaurant/Café) operators, and price-conscious consumers are looking for other options or cheaper brands, said P Chandrashekhara Reddy, vice president of sales & marketing at Gemini Edibles & Fats India.
In edible oils, the price sensitivity is based on relative pricing of other variants of oils. The recent duty cut on palm oil led to a fall in its price for a short while. However, the relative price differentials among sunflower, palm oil and other variants are more or less similar now.
Edible oil is consumed in three segments — home, HoReCa and industries.
“Household consumption of edible oil in South India (Andhra Pradesh, Telangana, Odisha and Karnataka) where we operate, is around 40%, while the rest is consumed by the HoReCa and industrial sector. With the lockdown due to Covid-19, as people were restricted to their homes and cooked their own food, the demand for the home segment was up by almost 10-15% till recently,” the Gemini Edibles VP said.
“The demand for the oil in the industrial segment was retained but there was negligible demand from the HoReCa segment. With Unlock, the demand for the home segment has been stable, whereas there is a gradual increase in demand from the HoReCa segment,” he said.
“Edible oil prices are on an upward trend and we don’t see it easing for the coming quarters due to the global dynamics,” he added.