Import duty reduced: Cooking oil prices to cool down by Rs 6-8/kg due to reduction in import duty

Import duty reduced: Cooking oil prices to cool down by Rs 6-8/kg due to reduction in import duty

The government cut import duties on cooking oils to give some relief to consumers in the festival season as prices have been ruling high for more than a year. The import duty on crude and refined palm oil, soybean oil and sunflower oil has been cut between 16.5 % to 19.25% with effect from October 14 up to March 31, 2022. Meanwhile, the single month import of palm oils hit a 25-year high in September 2021 due to bullish sentiments and strong demand.

The impact of the duty reduction on crude palm oil is about Rs.14,000/-tonne, while it is Rs 20,000/tonne on crude soyabean oil and crude sunflower seed oil.

“The retail prices may cool down by Rs 6-8/kg. However, the consumers may not get full benefit of the duty reduction as the Malaysian prices have increased after India announced duty reduction,” said BV Mehta, executive director, Solvent Extractors’ Association (SEA).

“As global cooking oil prices are expected to remain firm in next 4 to 6 months, we may not see a drastic correction in domestic prices,” he added.

The industry has raised concern about timing of the decision. “As farmers are harvesting a record crop of soyabean and groundnut, reduction in import duty may affect the farmers’ realisation,” said Mehta.

February 2021 onwards, the central government gradually reduced the import duty on edible oils and froze the tariff value for nearly two months through July/August 2021. In recent months, it has stopped futures contract of mustard and imposed stock limit on edible oils and oilseeds to control inflation in cooking oils.

According to SEA, the single month import of palm oil in September 2021 at 12.62 lakh tonnes was the highest in 25 years since India started importing palm oil in 1996. The cumulative imports during the 11 months from November 2020 to September 2021 have been up by 2%.

In the first 11 months of the edible oil year (November-October), India’s imports of palm oil increased by 18% due to lower duties, while other cooking oils including soyabean and sunflower decreased by 19% due to high prices of soyabean and sunflower oils in the international market. Due to historically high prices of mustard oil, India has also started importing rapeseed oil.

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