Govt cuts import duty on refined palm oil to 12.5% to cool prices
NEW DELHI: Concerned over high prices of cooking oils, the government has reduced the basic customs duty on refined palm oil to 12.5% from 17.5% till March next year to boost domestic supplies and bring down rates in the domestic retail markets.
With reduction in the basic custom duty (BCD), the effective levy (including social welfare cess) on both refined palm oil and refined palmoline will come down to 13.75% from 19.25%, according to Solvent Extractors’ Association of India (SEA).
On Monday late evening, the Central Board of Indirect Taxes and Customs (CBIC) issued a notification which “seeks to reduce BCD on refined palm oil and its fractions from 17.5% to 12.5% till March 31, 2022”. The new rate is effective from Tuesday.
The average retail prices of groundnut oil on Monday stood at ₹181.48 per kg, mustard oil at ₹187.43 per kg, vanaspati at ₹138.5 per kg, soyabean oil at ₹150.78 per kg, sunflower oil at ₹163.18 per kg and palm oil at ₹129.94 per kg, as per the data available with the consumer affairs ministry.
Reacting on the duty cut, SEA
President Atul Chaturvedi on Tuesday said: “The announcement of reducing import duty on palmolien ( refined Palm) from 19.25% to 13.75% without simultaneously reducing import duty on CPO has the potential to increase the imports of refined palmolien at the cost of CPO which is the raw material for our refineries.” “This is contrary to our principle of Aatma-Nirbharta and may harm employment generation and value addition within India,” he said.
Chaturvedi, however, added that the silver lining is that this reduction has a sunset clause with March 31 as the last date.
SEA Executive Director B V Mehta felt that the imports of refined palm oil would increase as duty difference with Crude Palm Oil (CPO) has come down to only 5.5% now. The effective duty on CPO is 8.25% at present.
Besides reducing the BCD on refined palm oil, the government on Monday decided to allow traders to import refined palm oil without licence for one more year till December 2022. Market regulator SEBI banned launch of new derivative contracts of crude palm oil and a few other agricultural commodities.
All these measures have been put in place at a time when wholesale inflation is ruling high. In order to rein in the prices of edible oil, the government has cut import duties on both refined and crude edible oils several times this year. The last reduction on import duty was done by the government on October 14.