India's Edible Oil Industry and Rapeseed Meal Exports to China
India's edible oil industry identifies a lucrative opportunity worth ₹1,000 crore to export rapeseed meal to China. This is due to China's tariff war with Canada, which includes a 100% duty on Canadian rapeseed meal and Canola oil.
Background and Current Situation
- Rapeseed meal is a by-product of mustard oil production.
- China imposed retaliatory tariffs on Canada after Canada imposed duties on Chinese electric vehicles.
- India has a surplus of rapeseed meal, with potential exports of 0.5 million tonnes valued at around ₹1,000 crore.
- The Solvent Extractors' Association (SEA) has reached out to the Indian government to initiate negotiations with China to ease import conditions on Indian rapeseed meal, which were imposed a decade ago.
Historical Context
- Until 2011, India exported about 3-4 lakh tonnes of rapeseed meal to China.
- Exports were halted due to Malachite Green contamination.
- China permitted imports again in 2016 but with stringent conditions.
- Currently, only two Indian companies meet these conditions and are exporting rapeseed meal to China.
Market Dynamics
- China, a leading consumer, traditionally sources rapeseed meal from Canada and the European Union.
- China's tariffs and European shortages have increased global rapeseed prices.
- Indian rapeseed meal is about 35% cheaper than the international market rate.
Local Impact
Increased exports could bolster local mustard prices, currently low due to the use of grains for ethanol production and the substitution of rapeseed meal in animal feed by the by-products of grain-based ethanol.