The government abolished basic customs duty on crude varieties of palm, sunflower and soybean oils as well as cut duty on refined edible oils to reduce retail prices of edible oils and provide relief to consumers during the festive season.
Edible oil industry body SEA said retail prices of cooking oil operating at very high levels may now come down to Rs 15 per litre. The Central Board of Indirect Taxes and Customs (CBIC) in two separate notifications said that the reduction in import duty and cess effective from October 14 will be applicable till March 31, 2022.
Agricultural Infrastructure Development Cess (AIDC) on crude palm oil, crude soybean oil and crude sunflower oil has also been reduced.
Crude palm oil will now attract an AIDC of 7.5 per cent, while crude soybean oil and crude sunflower oil will attract a cess of 5 per cent each. Earlier the cess was 20 per cent, while the basic customs duty was 2.5 per cent.
After the reduction, the effective customs duty on crude palm oil will be 8.25 per cent. The effective duty on crude soybean oil and crude sunflower oil will be 5.5 per cent. Earlier, the effective duty on these three raw materials was 24.75 per cent.
Basic customs duty on refined varieties of sunflower, soybean, palmolein and palm oil has also been reduced from 32.5 per cent to 17.5 per cent. Refined versions do not attract AIDC.
Commenting on the development, Solvent Extractors Association of India (SEA) Executive Director BV Mehta said: “The government has reduced the import duty on edible oils due to higher retail prices in the domestic market and festive season.”
However, he said that the timing of the decision is not right as it may affect the income of the farmers.
“The harvesting of soybean and groundnut has started. The decision to reduce the import duty may lower the market prices and reduce the prices to the farmers,” Mehta said.
When asked about the impact of the decision on retail prices, Mehta said: “Retail prices of refined palm oil may come down by Rs 8-9 per liter, while that of refined sunflower and soybean oil by Rs 12-15. may be lacking. liter post this duty cut”.
Generally, international prices rise after India reduces its import duties, he observed.
This is the fourth round of duty cuts by the government in the last few months, as part of its efforts to reduce rates of cooking oil in domestic retail markets. The government has also taken other steps including imposing stock holding limits.
The prices of edible oil in the domestic retail markets have risen sharply by up to 46.15 per cent in the last one year due to global factors and local supply constraints. India meets more than 60 percent of its edible oil demands through imports.
According to SEA data, imports of edible oils rose 63 per cent to a record 16.98 lakh tonnes during September, driven by the highest ever shipments of palm oil. Earlier in October 2015, India had imported 16.51 lakh tonnes.
The import of 12.62 lakh tonnes of palm oil in September 2021 is the highest in a month since India started importing palm oil in 1996.
According to data maintained by the consumer affairs ministry, the average retail price of soya oil stood at Rs 154.95 per kg on October 9 this year, up 46.15 per cent from Rs 106 per kg in the year-ago period.
Similarly, the average price of mustard oil rose 43 per cent to Rs 184.43 per kg from Rs 129.19 per kg, while that of vanaspati rose 43 per cent to Rs 136.74 per kg from Rs 95.5 per kg in the said period.
In the case of sunflower, its average retail price rose by 38.48 per cent to Rs 170.09 per kg on October 9 this year from Rs 122.82 per kg in the year-ago period, while palm oil price rose 38 per cent to Rs 132.06 per kg. Went. Gaya. During that period Rs. 95.68 per kg.
Indonesia and Malaysia are the major suppliers of RBD palmolein and crude palm oil to India. The country imports crude soybean oil mainly from Argentina, followed by Brazil, while crude sunflower oil is mainly imported from Ukraine, followed by Russia and Argentina.
Abhishek Jain, Tax Partner, EY says, “In view of rising edible oil prices, the government has reduced basic customs duty rates on crude as well as edible grade oils. This decision of the industry will be highly appreciated. And this will also help in reducing the cost burden on the end consumers.”
(with PTI input)