As festivals are around the corner, the government is taking step to control rising edible oil prices by reducing base custom duties on palm, soyabean and sunflower oils thereby bearing a revenue loss of Rs. 1,100 crores.
According to the industry body, this could bring down retail prices by Rs. 4-5 per litre. The custom duties have been reduced on both crude and refined variants of these three cooking oils, according to a release by the Consumer Affairs, Food & Public Distribution. But the agri-cess on crude palm oil has been increased from 17.5 per cent to 20 per cent.
The finance ministry has notified the cut in customs duties of these oils effective from September 11 till further orders. As per the finance ministry notification, the base import tax on crude palm oil has been reduced to 2.5 per cent from 10 per cent, while the tax on crude soyabean oil and crude sunflower oil has been reduced to 2.5 per cent from 7.5 per cent.
With this reduction, the effective duty on crude palm oil, crude soyabean oil and crude sunflower oil will come down to 24.75 per cent, whereas effective duty on refined palm oil, soy oil and sunflower oil will be 35.75 per cent. The move comes amid an unabated rise in edible oil prices in India — which imports 60 per cent of its demand — despite several recent government measures.
The Food and Consumer Affairs Ministry said due to the international prices, “domestic prices of edible oils have been ruling high during 2021-22 which is a cause of serious concern from inflation as well as consumer’s point of view.
Import duty on edible oils is one of the important factors that impacted landed cost of edible oils and thereby domestic prices, it said. Import duty on edible oils was reduced a few months back and has further been slashed now to boost domestic supply and check price rise.
According to the ministry, the current cut in customs duty on these cooking oils will result in an estimated revenue loss of Rs. 1,100 crores. And with an additional estimated Rs. 3,500 crores revenue loss from earlier reduction of custom duties on these oils, the government will bear a total loss of Rs. 4,600 crores which is expected to be passed on to the consumers.
Solvent Extractors’ Association of India (SEA) executive director B. V. Mehta said that the fresh round of cut “could bring down the retail prices by Rs. 4-5 per litre.” It is also generally seen that prices harden in the international market after India reduces its import duty so the real impact could be Rs. 2-3 per litre only. He added that the government should have reduced import duty on mustard (rapeseed) oil as well to cool prices. Retail edible oil prices in the country have increased in the range of 41 to 50 per cent in the last one year. To control prices of edible oils, the ministry has not only directed states to take action against hoarding at the level of wholesalers, millers and refiners by asking them to disclose their stocks, but also asked retailers to display prominently the prices of all edible oil brands for the benefit of consumers.