Centre cuts import duty on edible oils, festive season prices may ease
The Centre has cut import duty on soybean, palm and sunflower oil, a move the industry body IVPA says could bring down retail prices this festive season.
The central government has cut import duty on soybean, palm and sunflower oil. The Indian Vegetable Oil Producers' Association (IVPA), an industry body, says the decision will be felt in the retail market during the festive season and edible oil prices could come down.
India meets about 60 percent of its total edible oil requirement through imports. On Wednesday, the government cut the Basic Customs Duty (BCD) on crude sunflower oil from 10 percent straight to zero. The BCD on refined sunflower oil has been cut from 32.5 percent to 22.5 percent. The BCD on crude soybean oil and palm oil has been cut from 10 percent to 5 percent, and on refined soybean oil and palm oil from 32.5 percent to 27.5 percent.
The decision comes with the festive season approaching. According to IVPA president Sudhakar Desai, the lower import duty will reduce the cost of imported edible oil, which could help keep prices somewhat in check for consumers.
Desai said India still depends heavily on imports for its edible oil needs, so the domestic market keeps moving up and down according to international prices and global supply conditions. He said the fresh relief on sunflower and soybean oil imports could reduce demand for palm oil to some extent. He also said palm oil prices are expected to stay relatively high because of the mandatory B50 biofuel requirement and a slower pace of increase in palm cultivation area.
Desai also clarified that how much of the duty cut reaches consumers does not depend on customs duty alone. International commodity prices, freight costs, exchange rate fluctuations, domestic oil availability and stock levels are among other factors that have an effect.
He said maintaining adequate oil availability across the country in the coming festive months is the industry's biggest priority, and the new duty structure will also affect the demand calculations in that regard. Desai said the duty cut on sunflower oil is bigger, making it more affordable than before, especially in the parts of South India where its consumption is highest.
