Customs duty waiver on edible oil imports

Customs duty waiver on edible oil imports

Subject – Economy

Context – Commerce Minister Piyush Goyal announced that the government has decided to waive customs duty on import of crude sunflower, palm and soyabean oil, a move aimed at controlling their prices.

Concept –

• Commerce Minister Piyush Goyal announced that the government has decided to waive customs duty on import of crude sunflower, palm and soyabean oil, a move aimed at controlling their prices.

Consumption & imports

• Of the 20-21 million tonnes of edible oil that India consumes annually, around `4-15 mt is imported.
• India is second only to China (34-35 mt) in terms of consumption of edible oil.
• Palm oil (45%) is the largest consumed oil, mainly used by the food industry for frying namkeen, mithai, etc, followed by soyabean oil (20%) and mustard oil (10%), with the rest accounted for by sunflower oil, cottonseed oil, groundnut oil etc.
• Crude and food-grade refined oil is imported in large vessels, mainly from Malaysia, Brazil, Argentina, Indonesia etc.
• Given the heavy dependency on imports, the Indian edible oil market is influenced by the international markets.
• Home-grown oilseeds such as soyabean, groundnut, mustard, cottonseed etc find their way to domestic solvent and expellers plants, where both the oil and the protein-rich component is extracted. The latter is an exportable commodity.

Prices and politics

• Prices of edible oil have been rising across the country In the last few months. Data collated by the Price Monitoring Cell (PMC) of the Ministry of Food and Consumer Affairs show that most edible oils are trading between Rs 130-Rs 190/litre.
• The government has not only abolished the basic customs duty on crude palm, soyabean and sunflower oil, but also slashed the agri cess levied on these until March 31, 2022.
  • This comes days after the Centre authorised the states to impose a stock limit on oilseeds and oil to control prices.
• The government has been slashing duty rates on both crude and refined oils since February. This will be the fifth such intervention to control prices.
• Be it the production of palm in Indonesia and Malaysia, or soyabean in Argentina/Brazil, or sunflower in Ukraine, chances of immediate improvement of supplies are slim.
• Farmers fear the present decision will hit their earnings further.

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