Edible oil industry cautions against import duty cut to cool down prices

Says move ahead of planting season could have negative impact on growers

Edible Oil industry players today cautioned the government against resorting to any knee-jerk reaction of lowering import duties to cool down domestic prices, saying it could have a 'very negative’ impact on oilseed farmers, kharif planting for which will start in the coming few weeks.

That apart, the global edible oil markets have already started softening which might lead to a drop in domestic prices in the next week to 10 days, the industry said.

The industry associations, traders and stakeholders expressed their views during a meeting called by the union government to solicit them and find a way forward to cool down the sharp rise in domestic edible oil prices.

Secretaries of departments of food, consumer affairs, agriculture along with representatives from state governments were part of the meeting.

Edible oil prices in the domestic markets have risen sharply in the last one year with retail rates of some such as soybean oil doubling from around Rs 90 per liter in May 2020 to almost Rs 165-170 per litre now.

Similarly, prices of other edible oils have also risen sharply and the main reason for the same is a spike in global markets as India imports more than 60 per cent of its annual requirement of edible oils.

“We have seen than as soon as India lowers the import duties to cool down prices, international markets move up which negates the impact of duty cut and also does not lead to substantial gain for consumer while the Centre loses revenues by that much amount,” Atul Chaturvedi, President of Solvent Extractors Association of India (SEA), who participated in the meeting said.

Chaturvedi said that apart from, opposing any move to reduce import duties on edible oils, the association has also urged the Centre to minimize speculative play on the exchanges by increasing margins and daily circuit limit and also refrain from imposing the draconian Essential Commodities Act.

The Central Organisation for Oil Industry and Trade (COOIT) was also against any reduction in import duties on edible oils but wanted the Centre to remove the GST of 5 per cent on mustard seed and oil as it will help farmers and consumers both.

“At present, GST on mustard seed and oil is around Rs 7-8 per kilogram,” COOIT said.

On its part, the Centre urged the state governments and all other stakeholders to take all possible help to cool down edible oil prices in the interest of consumers.