To control rising edible oil prices during the festival season, the base custom duties on palm, soyabean and sunflower oils have been reduced further, bearing a revenue loss of Rs 1,100 crore, the government said on Saturday.
The move, industry said, 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, it said.
The finance ministry has notified the cut in customs duties of these oils effective from September 11 till further orders, it added.
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, soyoil 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 crore.
And with an additional estimated Rs 3,500 crore revenue loss from earlier reduction of custom duties on these oils, the government will bear a total loss of Rs 4,600 crore which is expected to be passed on to the consumers, it added.
Solvent Extractors’ Association of India (SEA) executive director B V Mehta told PTI 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 said and added 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.
“…. Some states have already notified that they (retailers) have to simply display at what rate it is available. Then it is a consumer’s choice to make a choice whether to buy x or y brand depending on his own preference,” Union Food Secretary Sudhansu Pandey told media after a meeting with states officials and industry stakeholders held on Friday.
Consumers can choose the cheaper one and brands will also be under pressure to reduce prices, he had said, adding that the state governments will enforce the requirement of displaying the prices.
Total import of vegetable oils (edible and non-edible oil) during November 2020 to July 2021 fell by 2 per cent to 96,54,636 tonne, compared to 98,25,433 tonne in the corresponding period of the previous oil year (November-October), according to the SEA data.
Edible oil is India’s third-largest imported commodity after crude oil and gold.
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