Govt allows duty-free import of 2MT of sunflower, soybean oil
India gets soyabean and sunflower oil from Ukraine, Brazil, Argentina, Russia
NEW DELHI: The Union government on Tuesday allowed the duty-free import of 2 million tonne each of crude (unrefined) soyabean oil and crude sunflower oil for 2022-23 and 2023-24, according to a notification by the directorate-general of foreign trade, as part of a series of steps aimed at cooling runaway inflation.
India has stepped up measures to battle a global commodity-price spiral that threatens growth and has stoked public angst. On Saturday, Union finance minister Nirmala Sitharaman announced changes to levies on several commodities, especially on industrial raw materials, and cut excise duty on petrol by ₹8 a litre and on diesel by ₹6 a litre to cushion consumers from rising prices.
These steps were preceded, on May 4, by the Reserve Bank of India’s surprise move to hike its key lending rate (repo rate) by 40 basis points to 4.40% to tame prices.
India’s retail inflation surged to an eight-year high at 7.8% in April on soaring food and fuel rates.
The latest move to waive import duties, effected by the revenue department, is likely to lower the prices of edible oil, a commodity for which inflation has become entrenched as supplies have dwindled in recent months due to the Russiaukraine conflict, and an earlier (now reversed) decision by Indonesia to ban the export of edible oils.
India imports up to twothirds of its cooking oil requirement to meet the domestic demand.
High international prices of edibles have a substantial impact on local prices as India is a net importer. Domestic edible oil prices have surged over 30% year-on-year.
On October 2021, the Central Board of Indirect Taxes and Customs, in two separates orders, slashed basic customs duty. However, it continued with the 5% agriculture infrastructure and development cess (AIDC) on three grades of edible oils.
India’s consumer price inflation will likely overshoot the central bank’s target range this fiscal to average around 7.5%, according to a Bloomberg report quoting Mridul Saggar, a former member of the RBI’S monetary policy committee.
In April, as retail prices soared to their highest level in eight years, food inflation climbed 8.38%. Wheat prices rose nearly 20%, prompting the government to ban private exports on May 13.
“If you look at the whole set of measures taken by the government, they represent some strongest steps possible to check inflation but their effects will come into play with a time lag as is typical,” said Ashok Agrawal of Comtrade, a trading firm.
The government should also slash AIDC on palm oil to further cool prices, said BV Mehta, the executive director of Solvent Extractors’ Association of India, an industry body.
India depends on Indonesia and Malaysia for palm-oil imports, and on Ukraine, Argentina, Brazil and Russia for most of its sunflower oil and soyabean-oil demand. India’s annual import of edible oil stands at nearly 13 million tonne.
DOMESTIC EDIBLE OIL PRICES HAVE SURGED OVER 30% YEAR-ON-YEAR AS AN IMPACT OF HIGH GLOBAL PRICES