Import duty on edible oils hiked to shield farmers - mydigitalfc.com

Concerned over falling global edible oil prices, the government on Thursday hiked import duty on both crude and refined vegetable oils by five percentage points to protect the interest of domestic oilseeds growers and refineries.

The duty hike will not impact domestic retail pri­ces. “The hike will not impact domestic prices, whi­ch are already on a declining trend,” an analyst said. The finance ministry notification said basic customs duty on crude vegetable oils has gone up to 7.5 per cent from 2.5 per cent and on refined vegetable oils from 10 per cent to 15 per cent.

The notification followed pressures from both food civil supplies and agriculture ministries, as falling global prices and cheaper imports had hit Indian farmers hard and led to under-utilisation of refining capacity.

Edible oil imports have risen steadily in the country, which meets 60 per cent of its requirement through imports and the balance 40 per cent from domestic production.

India imported 11.6 million tonnes of edible oil in 2013-14 against 10.4 million tonnes in the previous year. It is expected to hit 12.5-13 million tonnes this year.

The annual domestic production has been pegged at around 6 million tonnes. The edible oil year begins in November.

The import duty hike will also help the finance ministry garner more revenue at a time when it fears a shortfall of Rs 1 lakh crore in tax mopup due overestimation of revenue projections. Recently, the government had hiked excise duty on petrol and diesel taking advantage of the fall in global crude oil prices. The domestic edible oil industry had been pressing for an import duty hike amid strong volatility in prices since July and domestic solvent extractors working at less than 50 per cent capacity due to cheaper imports. Falling prices have also proved to be a disincentive for domestic oilseed growers to increase production, despite India having to depend on imports to meet its requirement.

Industry body Solvent Extractors’ Association welcomed the move, saying the import duty increase was necessary to protect domestic oilseeds processors. Soyabean price is today ruling at around Rs 3,200 per tonne compared with Rs 5,000 last year, even though it is marginally higher than the minimum support price of Rs 3,000 per tonne.

US, Brazil and Argentina are the top three producers of soyabean oil, whose price has been ruling at a five-year low of $13.3 a bushel globally.

Price of palm oil, which India imports in large quantity from Malaysia, too has dropped to a four-year low of 2,219 ringgits per tonne from 2,660 ringgits last year.