New Delhi: Concerned over high prices of cooking oils, the government has reduced the basic customs duty on refined palm oil to 12.5 per cent from 17.5 per cent till March next year to boost domestic supplies and bring down rates in the domestic retail markets.
With reduction in the basic custom duty (BCD), the effective levy (including social welfare cess) on both refined palm oil and refined palmoline will come down to 13.75 per cent from 19.25 per cent, according to Solvent Extractors’ Association of India (SEA).
On Monday late evening, the Central Board of Indirect Taxes and Customs (CBIC) issued a notification which “seeks to reduce BCD on refined palm oil and its fractions from 17.5 per cent to 12.5 per cent till March 31, 2022”. The new rate is effective from Tuesday.
The average retail prices of groundnut oil on Monday stood at Rs 181.48 per kg, mustard oil at Rs 187.43 per kg, vanaspati at Rs 138.5 per kg, soyabean oil at Rs 150.78 per kg, sunflower oil at Rs 163.18 per kg and palm oil at Rs 129.94 per kg, as per the data available with the consumer affairs ministry.
Reacting on the duty cut, SEA President Atul Chaturvedi on Tuesday said: “The announcement of reducing import duty on palmolien ( refined Palm) from 19.25 per cent to 13.75 per cent without simultaneously reducing import duty on CPO has the potential to increase the imports of refined palmolien at the cost of CPO which is the raw material for our refineries.”
“This is contrary to our principle of Aatma-Nirbharta and may harm employment generation and value addition within India,” he said.
Chaturvedi, however, added that the silver lining is that this reduction has a sunset clause with 31st March as the last date.
SEA Executive Director B V Mehta felt that the imports of refined palm oil would increase as duty difference with Crude Palm Oil (CPO) has come down to only 5.5 per cent now. The effective duty on CPO is 8.25 per cent at present.
Besides reducing the BCD on refined palm oil, the government on Monday decided to allow traders to import refined palm oil without licence for one more year till December 2022. Market regulator SEBI banned launch of new derivative contracts of crude palm oil and a few other agricultural commodities.
All these measures have been put in place at a time when wholesale inflation is ruling high.
In order to rein in the prices of edible oil, the government has cut import duties on both refined and crude edible oils several times this year. The last reduction on import duty was done by the government on October 14.
Earlier in the day, the commerce ministry said traders will be allowed to import ‘refined bleached deodoerised (RBD) palm oil’ and ‘refined bleached deoderised palmolein’ without licence for one more year till December 2022.
According to the SEA, India’s dependence on import of edible oils is nearly 65 per cent of the total consumption of about 22-22.5 million tonne. The country imports 13-15 million tonne to bridge the gap between demand and domestic supply.
For the last two marketing years (November to October), due to the pandemic, the imported quantity reduced to nearly 13 million tonne.
During 2019-20 oil marketing year, the import dropped to 13.2 million tonne valued at about Rs 71,600 crore.
In 2020-21, India imported a similar quantity but the import bill jumped by 63 per cent and touched an alarming level of Rs 1.17 lakh crore due to hike in international prices of edible oils, SEA had said earlier.