Govt Likely To Raise Import Taxes On Vegetable Oils To Support Farmers: Report
29/08/2024 (ABP News Bureau) - This proposed increase, which is expected to be officially announced in the upcoming weeks, aims to shield domestic producers by potentially curbing demand and lowering imports of oils
The government is contemplating a potential rise in import taxes on vegetable oils to offer support to farmers struggling with declining oilseed prices, according to a Reuters report citing two government sources on Wednesday.
This proposed increase, which is expected to be officially announced in the upcoming weeks, aims to shield domestic producers by potentially curbing demand and lowering imports of palm oil, soybean oil, and sunflower oil, as per the report. The move could help stabilise the market and provide relief to local farmers facing financial challenges due to reduced prices for oilseeds.
"We are exploring all options to help farmers. Increasing import taxes is one of the options," said a government source in the report.
The farm ministry has proposed increasing import taxes on vegetable oils to assist farmers facing financial difficulties due to plummeting oilseed prices. According to another unnamed government official in the report, the Department of Revenue, which is part of the finance ministry, will make the final decision on this proposal.
In 2022, India removed basic import taxes on crude vegetable oils to help stabilise prices. However, Delhi continues to impose a 5.5 per cent tax known as the Agriculture Infrastructure and Development Cess.
Farmers argue that raising import tariffs could help counteract the significant drop in oilseed prices. Currently, domestic soybean prices are approximately 4,200 rupees per 100 kilograms, which is below the state-fixed support price of 4,892 rupees. Farmers in Maharashtra, India's second-largest soybean-producing state, have expressed dissatisfaction with these lower prices.
Maces Gaikwad, a farmer with a 4-acre (1.62-hectare) soybean plot, mentioned in the report, "At the current price, we are not even covering our production costs, let alone earning a profit."
With the new soybean harvest set to arrive in six weeks, B.V. Mehta, Executive Director of the Solvent Extractors' Association of India, expects further price declines, states the report.
In July, India’s vegetable oil imports surged by 22.2 per cent to 1.9 million metric tons, marking the second-highest level on record. India imports over 70 per cent of its vegetable oil needs, primarily purchasing palm oil from Indonesia, Malaysia, and Thailand, as well as soy oil and sunflower oil from Argentina, Brazil, Russia, and Ukraine.