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Palmed off?

THE MUCH-HYPED visit of the Prime Minister, Mr Atal Bihari Vajpayee, to Malaysia seems to have achieved little by way of positive result on the political agenda. On the economic front there is only some hope, despite perceived opportunities for both coun tries to work together in such areas as infrastructure, information technology and agri-business.

It was least surprising that Malaysia, seriously concerned over India's high import duty on palm oil, exerted immense pressure for parity of duty with soyabean oil -- that is, get the high Customs duty on palm oil (75 per cent on crude and 85 per cent on refined) to the level of soyabean oil (45 per cent). Admittedly, the Malaysian economy is to a considerable extent dependent on palm oil export earnings, and low prices of the continuing bear market (nearly 30 months now) are surely enervating. Little w onder, the high duties recently levied by India -- the world's single largest import market -- are seen as adding insult to injury, though New Delhi has its own internal troubles as justification for raising a tariff wall for a wide range of agricultural commodities, including edible oils.

Mr Vajpayee's dilemma, and indeed compulsion as state guest, was palpable when he promised to review the duty in a way that would safeguard the interests of farmers and yet facilitate import of Malaysia's crude palm oil for India's under-utilised refiner ies. How he would harmonise the obviously conflicting interests remains to be seen. Having committed, albeit under pressure, there will have to be at least a token relief of duty on palm oil, though oilseed processing industries here are making out a cas e for a further increase in duty. Apparently, the Indian side had not done its homework thoroughly and probably failed to put its point across effectively. Despite being the largest buyer of Malaysian palm oil, India not only failed to put up a tough bar gain to wrest concessions, but actually gave something away. Even the $1.8 billion five-year railway project was not exactly a favour, but was bagged by Indian Railway Construction Company on merit. Interestingly, payment for the project will be made in the form of palm oil, which means India has actually underwritten import of a substantial volume annually for next five years. However, given the volatile nature of the palm oil market, India is unlikely to derive any significant commercial benefit on th e palm-for-rail project. Also, the Indian side failed to push through other barter deals -- Malaysian palm oil for Indian wheat, rice and sugar. In the area of indigenous oil palm development, India should have obtained commitment from Malaysian players for financial and technological participation by presenting commercially attractive schemes. Sadly, there was no attempt and no promise of support to India's nascent oil palm development efforts. It is clear the Indian delegation did not anticipate Malay sia's obsession with the palm oil business. In the end, the engagement became a one-way traffic, rather than mutually beneficial.

Where do we go from here? There is no doubt whatsoever that India will continue to import sizeable quantities of edible oil in the foreseeable future given that our oilseeds production programmes are languishing for want of funds, strategy and commitment . Instead of merely tinkering with the duty structure from time to time, the policy-makers must get down to the really serious business of addressing ground-level issues of the vegetable oil industry -- low oilseed productivity, processing inefficiencies , quality problems and marketing inadequacies. The Technology Mission on Oilseeds, under the Ministry of Agriculture and the governments of major oilseeds-producing States, must rise to the occasion. The leadership qualities of the Centre are under test.