|
THE SOYBEAN PROCESSORS ASSOCIATION OF INDIA TRANSPORT SUBSIDY FOR SOY MEAL EXPORTS:
The export of oil meals has been contributing directly to the foreign exchange earnings of the country. Out of the total oil meals exports, Soybean meal exports constitute almost 90% of the export. Last year Soybean meal export contributed Rs. 3800 Crores to the exchequer. The Soybean industry also contributes another Rs. 3500 Crores by way of import substitution of Edible Oil to the domestic Edible Oil pool. However, during the current year, we are expecting about 4 million tonnes of Soymeal Exports. But the high cost of transportation has made the Indian Soybean meal uncompetitive in the international market in comparison with the prices offered by the US and South American countries, which are the main producers of Soybean meal. The Soybean processing units in these countries have the inherent advantage that their plants are located near Port areas, which reduces their freight rates substantially. It can be substantiated from the fact that while the price prevailing in the international market during 1998-99 was US$ 142 per MT (Chicago Board of Trade) the Indian FOB price was US$ 145 per MT, a very narrow range in comparison with the present pricing which shows a huge gap with the CBOT price of US$174 per MT, with Indian exports costs at US$ 202 per MT. It may be noted that the ocean freight from Mumbai to Singapore is US$ 12 per MT only, whereas the Indian supplier has to pay more than US$ 12 per MT for transporting Indian Soymeal form hinterland to port. The industry is confident that if the Government provides transport subsidy of Rs. 700/- per MT for export of Soybean meal, the exports can be further increased and Indian Soybean meal can also become competitive in the international market. Besides achieving the increase in exports, the Soybean industry would get a new lease of life and lacs of Soybean farmers would be benefited. SOPA would, therefore, request that the case of transport subsidy to the export of Soybean meal be considered favourably on similar lines as has been provided by the Government in the case of export of Sugar under the "Sugar Development Fund Act 1982". The bound rate of duty as per the agreement between India and US for import of Soybean oil has been at 45% while the custom duty on the import of other soft oils can go upto 300%. The Government has, however, placed import of other soft oils at a custom duty of 75%. The renegotiation of bound rate is a long drawn process. It would, therefore, be worth considering to put a Tariff Rate Quota of 1 million tons on the import of Soybean Edible Oil per annum. Any import of Soybean Oil over and above this quota can be allowed at the same rate of custom duty as is applicable to other oils. This TRQ should be applicable on a monthly basis within the overall limit of the annual TRQ. China, which was the largest importer of Edible Oil before India over took that position, has now adopted a policy of quota in relation to the import of soybean grain and such quota is released every month for exports of soybean grains to China. SOPA, therefore, suggest that a TRQ of 1 million tons per annum should be applied for import of soybean Edible Oil at the bound rate of duty of 45% to facilitate proper price realization to the Indian Soybean Farmers The soy processing plants use hexane as solvent in the production of De Oiled Cake meant primarily for export. The industry, which is largely export, oriented and is exporting 70-75% of its production. It is, therefore, suggested that hexane and diesel used in the processing plants should be exempted from the purview of excise duty. Oilmeal export, which contributes a sizeable chunk to the total exports of the country, has shown a declining trend during the current year. Soybean meal exports, which account for almost 80% of Oilmeal exports, in particular, have shown a steep decline. Soybean meal exports which were placed at 3.5 million tons during last year are expected to be just about 2 million tons during the current year. Part of the decline in the exports is attributed to increase in input costs mainly, Coal, Hexane and Rail transportation.
Earlier the availability of coal was as per the policy of sponsorship system of allocation of coal through linkage in the non-core sector, but this year Coal India Ltd. has formulated a new policy of sale of coal through e-auction system. Through this auction system, the industry, per-se has to pay a higher price for procuring coal and therefore, the input cost goes up. It would be in the interest of Soya processing industry and exports of soybean meal that the earlier system of linked supply is restored to the industry so that it can compete and export in the international market. The prices of Hexane have been revised recently from Rs. 27000/- to Rs. 34000/- putting additional cost burden on the soybean meal exports. Being an Agro based export oriented industry and using the produce of lakhs of farmers, the export needs to be encouraged and, therefore, the input cost should be reduced for usage of Hexane required for soybean processing. Recently, some of the members have received show cause notices from Central Excise Department regarding allocation of Hexane on duty free basis for export orders. In this context, the Excise and Customs Department officials are misinterpreting that since Hexane is used for extracting oil, oil should be the commodity, which needs to be exported. However, as per the input-output norms, the DGFT has clearly specified that for every ton of export of DOC/Soybean extraction, Hexane would be replenished @ 9.2 liters. The railways have increased the minimum weight condition to 60 MTs in case of the BCN wagons and 63 MTs in case of BCNA wagons. This needs to be revised downward to the earlier 50 MT. if soybean meal exports are to become competitive in the international market.
The oilseeds scenario in the country is on upturn for the last 2-3 years. The farmers are realizing good value for their produce much above the Minimum Support Price declared by the Government. In order to provide level playing field, the Government is requested to maintain the currently prevailing customs duties applicable on the various Edible Oils. Soybean is a miracle crop and its products are a boon to the mankind because of the high protein content and excellent medicinal values. The use of soybean helps in the prevention of diseases such as coronary heart disease, breast cancer, osteoporosis, menopausal disorders, gastrointestinal disorders and diabetes. Because of its high protein content the use of soybean products could help in eradicating malnutrition prevalent amongst children, women and the large rural population at a very economical cost. This would also help the Government save substantial amount spent for providing health care to the general population. However, all the value added products needs conceptual promotion and huge gestation period to establish itself. SOPA would, therefore, request the Government to kindly exempt the Soya Products like Texturised Vegetable Protein; Soya Milk & Soya Milk based products, Soya Flour and its products, Acid oil etc., from the purview of excise duty. The Soy Processing Industry is facing very tough competition in the International Market of Soybean Meal. Competition in the market is fierce from countries such as U.S., Brazil and Argentina who also have the financial muscle to operate in the market. In order that the Indian Soy Meal Exports are able to not only meet the demand from the existing markets but also find new markets for its produce, Market Develop Assistance (MDA) of the Ministry of Commerce is available to the Soy Meal Exports for export promotion activities. The assistance from the MDA should be channelised through SOPA for the exports of Soy Meal and to promote its USP of "Non-GMO Exemption of Service Tax: The scheme of the Government of India is to promote development of oil seeds in the country and to make the country not only self sufficient but also export the Edible Oil and accordingly, the Government of India have implemented the Crop Diversification Programme, which provides encouragement to different States of agro oilseeds. However, if Service Tax is imposed on the Commission Agents of Edible Oil then the object of the Government of India will not be fulfilled. SOPA therefore that the Edible Oil should be taken as agriculture produce and the services of Commission Agents on Edible Oil be not taxed under the Service Tax Act. Refund/Remission of service tax paid on input services for export of unmanufactured goods: As per Rule 5 of CENVAT credit Rules 2004, input or input services used in the final products, or used in the intermediate products cleared for export, or used in providing output services which are exported, the CENVAT credit in respect of the input or input services so used shall be allowed to be utilized by the manufacturer or provider of output services towards payment of excise duty or service tax on output services. Where such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to certain conditions. Exporter ( Merchant exporters) of unmanufactuered goods viz. agri commodities are host of taxable services of viz. Custom House Agency, Management Consultancy, Technical Inspection and Certification, Telephone Services, General Insurance, Security Agency, Cleaning Activity, Banking and other Financial Services, Credit Rating Agency , Business Auxiliary Services Etc. Further, as recipient of services of GTA and as receiver of services from abroad, the Merchant Exporter are liable to pay services tax on such services too Many of the Merchant Exporters do not have any manufacturing activity or provide any taxable services to utilize input credit nor in a position to claim refund of input service tax paid on various taxable services used in export of unmanufactured goods Even Foreign Trade Policy ( Para 2.48.1) provides for remission of service tax levied on goods and services which are exported from units in Domestic Tariff Area, CENVAT Credit Rules to be suitably amended to enable the exporters of unmanufactuered goods to claim refund of service tax paid on various taxable services used in export of unmanufactuered goods. Vide public notice No. 47(RE-2003)/2002-2007, dated 9th February 2004 the Government has reduced the DEPB rate from 2% to 1% on packing of soybean meal/soybean extraction/DOC. Exporters of Soybean Meal are not offered any export incentive by the Government. Therefore, this incentive offered to exporters had given boost to the export of Soybean Meal. We would also like to mention that because of the incentive the Soybean Sector could easily tackle the burden of appreciation in Rupee by 7%, increase in domestic transport cost as well as substantial increase in the sea freight to various destinations. In view of the stiff competition in the international market, the exporters would be hard pressed for competing against giants from countries such as the US, Brazil and Argentina. Moreover, the bulk of the agri produce is from the hinterland, which after processing needs to be moved 100s of kilometers to the ports for exporting to various destinations. This entails additional transportation cost which also adds to the costs of the exported products viz., soybean meal/soybean extraction/DOC. Any reduction in the DEPB rate for packing materials at this point of time when the country has received a good crop of soybean and the soybean farmers are getting good prices for their produce, would not be prudent on the part of the Government. We would, therefore, urge that at least status quo should be maintained and the DEPB rates should be revised back to at least 2% as prevailing and the same should be extended to the entire exports of Soybean meal/De-oiled Cake. Ref: SOPA/3.28/DRK/FK/2006/ Mr. Prashant Goyal Deputy Secretary Dept. of Commerce Ministry of Commerce & Industry Udyog Bhawan NEW DELHI – 110 011 Dear Sir, This has reference to your fax message regarding pre - budget memorandum of SOPA for the year 2007-08. As you are aware that Soybean is one of the important oilseed crops of India ranking second after groundnut in production. The area and production of soybean during the current year is 7.7 million hectare and 7.1 million tonnes, respectively. Soybean is contributing to the national economy by way of import substitution of edible oil on the one hand and earning approximately Rs. 3700 crores of foreign currency annually through export of soy-meal on the other hand. The crop is consistently alleviating the livelihood and living standard of lacs of soybean farmers across the country. The industry also provides direct & in direct employment to thousands of skilled & semi skilled workers. In order to provide vitality & vibrancy to this sector and to march towards self-sufficiency in Edible Oils we submit the enclosed suggestions for the Soy processing industry, for the Budget 2007-2008. This may please be considered appropriately while finalizing the ministry submission to the Government. Thanking you, Yours faithfully, D.R. Kalra |
|
||