Govt likely to reduce import duty on cooking oils to curb price surge

The import duty on edible oils could be reduced ahead of the festive season given how the Indian households have been suffering from rising edible oil costs, according to a report. The government is mulling to cut the import duty on cooking oil to curb food inflation and control the increasing price of edible oil during the festive season.

“This is a crackdown on food inflation and a step to ensure that prices during the festive season remain under control,” said a government official, according to the report in The Economic Times.

As per the government, there is an understanding to reduce the prices of cooking oil even though a short-term dependence on imports still prevails, the report added quoting the official.

Impact

According to the report, the Central government is likely to reduce the effective import duty, which also includes the cess and other charges, on crude palm, soya and sunflower oil to 24.75% from the existing 30.25%. Similarly, the import duty on refined palm and soya oil is expected to be slashed to 31.75% from the existing 41.25%.

The move comes in the wake of prices of mustard, vanaspati, soya and palm oil having increased almost 30% while that of sunflower oil by more than 40% over the last year.

The retail inflation for edible oil and fats in July was 32.53% as compared to 6.65% in January this year. India meets over 65% of its domestic demand for edible oil through imports and thus it is the largest importer of vegetable oils in the world. India imports palm oil mainly from Indonesia and Malaysia. The countries like Argentina, Brazil, Ukraine and Russia supply soya oil and sunflower oil to India.

Government’s stand

Earlier this month, Food Secretary Sudhanshu Pandey had said that the soaring edible oil prices were likely to ease by the year-end with the arrivals of domestic oilseed crops and with the international commodity futures beginning to show a declining trend.

A media report quoted other officials saying that one of the major reasons for the global surge in edible oil prices was the excessive buying of edible oil by China. Another reason cited was an aggressive pursuit of biofuel policies by many major oil producers and diverting their edible oil crops for that purpose. This included oil palm in Malaysia and Indonesia as well as soybean in the United States, the two oil types that contribute up to 50% for India’s domestic consumption.