25/03/2008 (Commodity Online), New Delhi - Edible Oil plays the role of a modulator in cooking where its presence makes food more delicious. In the market, edible oils drive the prices of other commodities such as vanaspati and vegetable fat producers.

The government found its influence in the market and reduced customs duty on edible oil. And the result has been excellent as the corresponding commodities prices were also slashed accordingly because edible oil serves as raw material of vanaspati, vegetable fat producers.

The import duty of crude palm oil has declined from 45 percent to 20 percent, a significant reduction and the prices of vanaspati and vegetable fat producers have their product prices by Rs 4-5/kg.

Concerned with spiralling edible oil price, which among others, is also responsible for driving up inflation, the government has slashed import duty on all crude vegetable oils from 45 percent to 20 percent and for refined vegetable oils from 55 percent to 27.5 percent, except soya oil, with effect from March 20.

As a quick result of the import duty cut on crude palm oil, vanaspati producers have cut their prices by Rs 30-40 per 15-kg container. With this, a retail consumer is set to get vanaspati at Rs 63-65 per kg than its previous prices of Rs Rs 67-70 per kg.

According to a top official of Indian Vanaspati Producers’ Association, despite the recent reduction on import duty of crude palm oil, the base import price of commodity remain unchanged at $447 per tonne from July 2006 and the effective customs duty on CPO now stands at 7.5 percent after the reduction.

“This would further help to control the cheap imports from Nepal and Sri Lanka, which have done great damage to the local vanaspati industry”, he said.

The check on cheaper imports from those two countries is expected to turn around many local vanaspati units, which being unable to face competition from cheaper imports, have been forced to run their plants at 20% of the capacity and help open a lot more closed units too, he added.