The ban on the import of refined palm oil from Malaysia can prove to be a boon for domestic edible oil companies like Adani Wilmer, Emami Agrotech, Patanjali Ayurved, Kargil, Gokul Agro. All these companies were facing a lot of difficulties due to the stock of imported oil and were not able to utilize their full potential.
Actually, in India, palm oil is cheaper even after importing from Malaysia, compared to the rate at which these companies sell refined palm oil. Patanjali has recently bought bankrupt edible oil company Ruchi Soya. The said companies dominate the edible oil market, so they will also benefit the most from the ban on imports.
Ban on Import of Malaysia
Significantly, the dispute between Malaysia and India increased after the opposition of the Malaysian Prime Minister Mahathir Mohammad to the Government of India's stand on Kashmir and citizenship law. India has prohibited the import of refined palm oil from Malaysia and there are also, indications that India may also ban the import of other commodities.
Actually, India has taken this step when the Prime Minister of Malaysia, Mahathir Mohammad, has strongly criticized India from Kashmir issue to citizenship law. Mahathir had said about the citizenship law that it is completely unfair. Apart from this, India is also upset with giving shelter to the controversial Islamic religious leader Zakir Naik.
Executive Director of Solvent Extractors Association of India (SEAI) B.V. Mehta said, 'In the year 2019, domestic edible oil refineries have been able to use only 40 percent of their capacity, whereas in the previous year they used 60 percent capacity. The entire industry was on the verge of closure. If the government does not ban imports, then they had no other option to save their existence.
Significantly, the government has not banned the import of crude ie non-refined palm oil from Malaysia. The advantage will be that domestic companies will cheaply import crude oil and sell it by refining itself here.
Mehta said, 'The industry had been demanding for a long time that imports be banned for some time. We import 95 lakh tonnes of palm oil every year.
Adani sells edible oils under the brand name Wilmer Fortune and has a vast range of edible oil spanning in all categories such as soy, sunflower, mustard, rice bran, groundnut and cottonseed. It can produce 16,800 tonnes of refined oil in a day. Restrictions on the import of refined palm oil may increase consumption of other edible oils, in which companies like Adani, Ruchi Soya, Patanjali, Emami are strong.
Yoga guru Baba Ramdev's Patanjali recently bought Ruchi Soya for Rs 4,350 crore through an insolvency process. Similarly, Ahmedabad's Gokul Industry also has all kinds of edible oil products. Edible oils are sold by Kargil under the brand name Gemini brand in India.
Indian edible oil imports have increased at the rate of 8 percent annually in the last decade and about 15 per cent of this is of refined oil.
India has been Malaysia's largest importer of edible oil. Not only this, India is the world's largest importer of palm oil. Malaysia is the second largest producer in the world. In the last financial year ended on March 31, Malaysia exported a total of $ 10.8 billion to India while importing only $ 6.4 billion from India.
If India directly prohibits the import of these goods, Malaysia's economy can be severely damaged. Palm oil accounts for about 45% of India's total edible oil consumption.
