The effective import duty on crude and refined varieties of palm oil, soyabean oil and sunflower oil has been reduced between the range of 16.5 and 19.25 percentage points. The cut will be effective from October 14.
As retail inflation in edible “oils and fats” surged to second-highest level in 2021 in September, the government on Wednesday cut agriculture cess on imported oils to 5 per cent and 7.5 per cent on various items from the existing 20 per cent. It also removed the 2.5 per cent basic import duty. The government is likely to lose about Rs 34,000 crore in revenues.
The consumer price inflation (CPI) in oils and fats surged 34.19 per cent in September, slightly below June’s 34.78 per cent. The arrival of next rabi oilseed crops is not going to ease prices as there is likely to be a fall in production of two major kharif oilseeds — soyabean and cotton.
However, the duty reduction may not result in any big relief to consumers as palm oil prices in Malaysia have increased. “Consumers may not get full benefit of the duty reduction. In fact, after the duty cut was announced by India, the Malaysian market has gone up by about RM 150-170 per tonne,” said BV Mehta, executive director of Solvent Extractors Association of India (SEA).
“The immediate trigger for this drastic duty reduction is largely on account of high price edible oil and onset of festive season and high food inflation. However, the timing of reduction of import duty is a cause of concern as farmers are now harvesting kharif soya and groundnut crops. This reduction in import duty may affect the farmers’ realisation for their oilseeds,” Mehta added. Demand for edible oils is increasing globally as many countries have started shifting to bio diesel.