Duty on edible oils likely to rise next season

The Union ministry of agriculture may raise the import duties on both crude and refined edible oil in the coming rabi season.

Official sources said a high-powered committee in the ministry reviewed the tariff structure last week, in the wake of the increasing import of edible oil to support growing domestic demand. “Even after the strategy to increase oilseed production in the country, the production has been stagnant for the last three to four years. Import is the only way out to meet the growing demand. Therefore, for this season, it is decided to retain the existing duty structure,” official sources said.

However, in the medium term, to increase domestic production of oilseeds and discourage imports, revising the import duties is the only option. “Only when imports become costlier will refiners focus on domestic oilseed producers. Thus a review is expected in the rabi season,” said sources.

Currently, crude edible oil is imported at zero import duty, while refined oil import attracts 7.5 per cent custom duty. Under the proposed review, the import duty on crude edible oil may be raised from zero at present, followed by an automatic increase in import duty on refined oil.

The Commission for Agricultural Costs and Prices has already recommended a rise in the duty on import of raw edible oil. It has been sent by the ministry of agriculture to the ministry of commerce.

“Global edible oil prices are on a rise and a further hike in import duty at this point of time will hurt consumers, since oil refiners pass on the price hike. It will be detrimental to consumer interest, as edible oil prices are already high. Therefore, imports in this season will be spared from any duty hike,” sources said. The other factor policy makers will have in mind is the cost of edible oil under the Public Distribution Scheme (PDS) to below-poverty-line (BPL) families. Procurement for this is done through imports. Currently, the procurement price through imports is Rs 45-50 per litre; the Centre gives a subsidy of Rs 15 a litre. States have their own subsidies, usually less than this.