‘Oil Palm Sector Needs Attention in this Budget’

‘Oil Palm Sector Needs Attention in this Budget’

The processed food industry in India is yet to reach its peak. The segment has high potential but also have some specific demands. Mr. Sanjay Goenka, President OPDPA – (Oil Palm Developers and Processors Association) shared his views and expectations from the finance minister on the upcoming Union Budget 2016.

Mr Goenka urged industry wide requirement of a separate oil palm development board aimed at development of Palm oil as an industry. Presence of such a board will help address issues faced by the industry on a priority basis. The following points can be dealt with by appointing such a board:

  • Separate import policy for palm oil industry – to support the burdening oil palm industry – The industry demands that there is need for a separate Palm oil import policy for the oil palm industry. This has to be done to ensure that import duty of palm oil can be increased to a level sustainable to the farmer/ industry. This will also ensure that other edible oil prices are not impacted and thereby control inflation while pushing for domestic production of palm oil. Increase the import duty of the palm oil to 45% from the current 12.5% is a must in order to enable domestic production
  • Separate budget of Rs. 10,000cr for oil palm industry development – A separate budget allocation should be made by the government to palm oil industry specifically to promote domestic cultivation of palm oil. This is in lines with the PMO press release.

Focused implementation of MIS pricing – Demand of stronger implementation of MIS pricing (Market intervention scheme) will help support the farmer community in case of crop losses incurred through market performance/scenario. This MIS price implementation through government intervention currently happens only at the time of calamities.

Urban land Ceiling act – Government to relax urban land ceiling act which helps to uncover the true potential of the industry. The current policies don’t allow companies to either acquire or lease land beyond an acreage as defined by the urban land ceiling norms. Relaxation of land ceiling norms for oil palm growth, will allow large scale plantation. The benefit of recently announced 100% FDI in Palm Oil can only be realized if ULC is relaxed.

In addition to this, the following may also be adopted:

  • Development of secondary forest land – Allotment of secondary forest land to companies in India for reforesting the land with palm plantations

Declare special status for North East States with respect to Oil Palm plantations – North East states like Arunachal Pradesh, Mizoram amongst others which has fertile and virgin land pools should be given special status with respect to Palm oil cultivation. The special status benefits should include – logistic/ infrastructure support to the developers, additional farm amenities to the farmer. This will not only help the growth of oil palm industry but also leads to economic development of the region.

For Oil Palm manufacturing industries – Considering the long gestation nature of the Oil Palm Project and the high capital cost incurred in setting up a Palm Oil Mill, the government must provide relief to the developers in terms of taxation benefits and Mill subsidies.