India has cut base import taxes on palm oil, soy oil and sunflower oil, a government order showed, as the world’s biggest vegetable oil buyer tries to cool near-record price rises.
The reduction in taxes could bring down prices of the edible oils in India and boost consumption, effectively increasing overseas buying by the south Asian country.
The base import tax on crude palm oil has been slashed to 2.5% from 10%, while the tax on crude soy oil and crude sunflower oil has been reduced to 2.5% from 7.5%, the government said in a notification late on Friday. The base import tax on refined grades of palm oil, soy oil and sunflower oil cut to 32.5% from 37.5%.
After the cuts, crude palm oil, soy oil and sunflower oil imports will be subject to a 24.75% tax in total, including a 2.5% base import duty and other taxes, while refined grades of palm oil, soy oil and sunflower oil would carry a 35.75% tax in total.
India fulfils more than two-thirds of its edible oil demand through imports and has been struggling to contain a rally in local oil prices for the last few months.
The country imports palm oil mainly from top producers Indonesia and Malaysia, while other oils, such as soy and sunflower, come from Argentina, Brazil, Ukraine and Russia.
According to BV Mehta, Executive Director, Solvent Extractor Association of India, it looks like the sunset clause has been dropped so there will be no auto revision with effect from 1 October.
“The current domestic bullishness in edible oils is spearheaded by low arrival of mustard seed. In Friday’s meeting with the food secretary, we had suggested a reduction of import duty on rapeseed oil in line with soya and sunflower oil, or even a little lower as it will have desired salutary effect on runaway mustard oil prices. This will also go a long way in cooling all edible oil prices as internationally edible oil prices have started showing some weakness,” he said.
Behind import tax cut
Yesterday, the union government had asked states to direct retailers to prominently display the prices of all edible oil brands for the benefit of consumers and take action against hoarding at the level of wholesalers, millers and refiners.
After a meeting with states’ representatives and industry stakeholders, Union Food Secretary Sudhansu Pandey imposed a stock limit on traders as well as the possibility of fixing MRPs for edible oils. He emphasised that market forces would determine rates in a good competitive environment.
In the past few months, the union government has reduced import duty on various edible oils and asked states to take details of stock of edible oils and oilseeds from wholesalers, millers, refiners and stockists. It has also announced a Rs 11,040 crore palm oil mission. Over the past year, retail edible oil prices in the country have increased in the range of 41% to 50%.
Pandey said the recent government measures, the expected arrival of good kharif soybean crop by the end of this month and declining global price trends in soyabean oil and palm oil should help cool down domestic prices.
The Kharif soybean crop of the 2021-22 crop year (July-June) is expected to be 5-10 per cent higher than the same period a year ago. It is also expected that rabi (winter) crop acreage under oilseeds will be higher as the government has increased the minimum support price which should encourage farmers to grow oilseeds, Pandey added.