Govt unlikely to raise import tariffs on edible oils
Retail inflation in edible oils in negative zone since Feb
14/09/2023 (Financial Express) - The government us unlikely to raise the import duties on refined edible oils, despite the sharp drop in domestic prices and low-priced imports, official sources said.
This is because it accords top priority to cooling inflation at this juncture. With a sharp rise in imports of edible oils – palm, soyabean and sunflower – due to softening of global prices and low import duties, the domestic industry has urged the government to increase the existing gap between the crude and refined palm oils to prevent ‘dumping’ by exporters in Malaysia and Indonesia.
Currently the landed cost of RBD palm oil on the Mumbai coast is $850/tonne against $ 860/tonne for the crude oil. With a huge surge in imports of edible oils – palm, soybean and sunflower, the imports during the 2022-23 (November-October) is likely to cross a record 17 million tonne (MT), up from 14 MT in the last year.
The Solvent Extractors Association of India (SEA) has urged the government to increase the gap between effective import duty on crude and refined edible oils. Currently, the effective import duty on crude oil is 5.5% and and that on refined oil is 13.75%.
“The gap between import duty on refined and palm oil has to be atleast 13% from the current level of 8.25% so that domestic refining the capacities are not adversely impacted by huge imports,” BV Mehtra, executive director, SEA, told FE.
In the 2017-18, India imported a record 15.1 MT of edible oil while during November-August of current year, the country imported 13.91 MT of edible oil.
Stating that there has been continuous decline in edible oil prices, a spokesperson of Mother Dairy, which sells edible oil under ‘Dhara’ brand, said “the consumption which was subdued on account of high prices will see a turnaround and with the upcoming festive period, consumers will feel at ease with the ongoing price trends.”
The landed prices of palm oil (at Mumbai port), which has close to 60% share in the country’s import basket, has declined by 18% to $ 860/tonne on September 8, 2023 against $1,044/tonne prevailed a year ago. Landed prices of crude soy and sunflower have declined 42% and 30% to $ 980/tonne and $935/tonne respectively.
Inflation in the oil & fats category declined by 15.28% in August 2023 and had been in the negative zone since February this year.
The government cut import duties on crude palm, soybean and sunflower oils in September 2022. In December 2022, it extended the concessional duties on edible oils till March 31, 2024.
India imports about 56% of its oil requirements of 25 MT annually and the bulk of its imports is in crude form. Out of the total imports of 14 MT of edible annually, the share of crude and refined oil is 75% and 25% respectively.
The share of domestic edible oil includes mustard (40%), soyabean (24%) and groundnut (7%) and others.
Annual imports of edible oil constitute mostly palm oil (8-8.5 MT), soyabean (2.7 MT) and sunflower (2 MT). While palm oil is imported from mostly Malaysia and Indonesia, soybean and sunflower oils are imported mostly from Argentina and Ukraine.