Informist, Wednesday, Sep 11, 2024

By Pallavi Singhal

NEW DELHI - The government is likely to raise import duties on a few edible oils by Tuesday, two senior government officials told Informist. Import duty on soybean oil and palm oil will be increased to support domestic prices and promote oilseed cultivation, an official said.

While the government had been considering the proposal for some time, the decision was finally taken keeping in mind the fact that soybean crop is about to be harvested. "The decision has already been made and only the final paperwork is being done," the official said.

Lower duty brings down the landed cost of edible oils, encouraging imports, which, in turn, drags down the prices of domestic cooking oil and oilseed complexes.

Mandi prices of soybean have remained almost 300-500 rupees below the minimum support price of 4,892 rupees per 100 kg for the past two months. Soybean prices in the benchmark market of Indore in Madhya Pradesh stood at 4,380-4,600 rupees per 100 kg, according to local traders.

According to an Informist report today, prices in some parts of Madhya Pradesh have fallen to a decade-low of 3,500-4,500 rupees per 100 kg. Prices have crashed just ahead of the start of new-crop arrivals.

"Our work is to protect the farmers and that can only happen if the produce is sold at the minimum selling price or above. Since prices have slid down below MSP, a need for hiking duties was felt," the second official said.

Last year, on June 15, the central government reduced the import duty on refined palm, soybean and sunflower oils to 12.5% from 17.5%. With social welfare cess of 10% the effective duty on refined edible oils is currently 13.75%.

Meanwhile, the effective import duty on crude varieties of the above-mentioned oils is 5.5%, with nil import duty and agri cess of 5% and social welfare cess of 10%.

The proposal to tweak the current duty has been accepted as the government wants farmers to grow more oilseeds, in the upcoming rabi sowing season, when India's largest oilseed crop mustard will be sown. The duty hike on palm oil will support sentiment in the sector as cheap palm oil imports become costlier and have a butterfly effect which will reflect on the prices of all edible oils.

While the officials did not reveal the exact amount duties are likely to be hiked, they said that the recommendation has been to bring back the duty difference between crude oils and refined oils to a minimum of 15%.

The Solvent Extractors’ Association of India has been urging the government to increase the duty differential of crude and refined oils to at least 15% to protect the domestic refining industry. SEA has pointed out that low import duties has kept Indian refining industry’s capacity under utilised and limited them to "mere packers".

India is the world’s second-largest consumer and largest importer of the commodity. According to the Solvent Extractors’ Association of India, India's edible oil import is expected to be between 16.0-16.5 mln tn during the 2023-24 season (Nov-Oct). In its latest data, SEA said that India imported 13.7 mln tn edible oils during the first 10 months of the oil year against 14.1 mln tn in the corresponding period a year ago. End

Edited by Deepshikha Bhardwaj

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