In a bid to contain the rising edible oil prices, India is looking to sign long-term contracts with Mercosur countries to import crude sunflower oil, Business Standard reported on March 26. Russia’s invasion of Ukraine has disrupted imports from Europe's second-largest nation, which has resulted in a sharp spike in edible oil prices.
India may need to slash the import duty on sunflower oil originating from Mercosur countries and relax testing requirements under the existing preferential tariff agreement (PTA) with the grouping, the report said citing sources privy to the development.
Mercosur, a Latin American trading bloc, is composed of sovereign member states: Argentina, Brazil, Paraguay and Uruguay. India had signed the PTA with Mercosur in 2004.
“We have had two-three rounds of discussions with Mercosur countries. We need to sign long-term contracts because in agriculture, you need to plan well ahead to meet demands. So far, Mercosur was targeting only China for sunflower oil exports since India has export restrictions. We have tariff quota restrictions as well as plant quarantine restrictions. We have to open the existing PTA with Mercosur and include the tariff reduction on sunflower oil under the trade deal,” a government official told Business Standard on condition of anonymity.
The official said India was also exploring reviving sunflower plantations in South India to be able to partially meet domestic demand in the long run.According to the report, India imports 60 per cent of its edible oil requirements, and sunflower oil constitutes around 14 per cent of such imports. In 2021, India imported 90 per cent of the $2.4 billion worth of crude sunflower oil from Ukraine and Russia, and only $233 million worth of sunflower oil from Argentina.
Since Russia’s invasion of Ukraine almost a month ago, the domestic price of sunflower oil has spiked to Rs 190 from Rs 140-150 per litre.