Government Cuts Duties on Palm Oil Imports after Rise in International Prices

The government cut duties on palm oil imports after a rise in international prices. After the onion price hike, consumers hit by cooking oil inflation owing to international market.

The Cut

Government slashed import duty on crude palm oil from 40% to 37.5% and 50% to 45% on refined palm oil. The cut is under the ASEAN agreement and India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA). The action has reduced the duty differential between crude palm oil and refined oil to 7.5% as against 10% earlier.

Reactions

Fearing the cut, Atul Chaturvedi, president of SEA stated it will increase imports of refined palm oil. Besides, it will negatively affect the working of the domestic industry, decreasing employment opportunities. Sudhakar Desai, president of Indian Vegetable Oil Producers Association declared it a biased move taking into account the damage to the domestic industry. The increased imports will not only prove harmful to the domestic palm oil refiners but also oil seed farmers. He further urged the government to keep the duty differential up to 15%. EA Executive Director, B V Mehta stated that farmers will no longer be able to enjoy a hike in their incomes as a result of government’s decision.

Opposing this, Delhi-based Indian Vegetable Oil Producers Association (IVPA) supported the government’s decision as it would allow them to import crude palm oil at low rates for the production of vanaspati oil.

India’s Edible Oil Imports

India imports around 90 lakh tonnes of palm oil every year. Though the Indian government seeks to decrease its dependence on cooking oil imports, it has made no substantial efforts in this regard. The problem calls for increase in domestic production of oil seed. This will make cooking oil less expensive and also add to farmers’ income. Also, the changes in import duties must work within a specified range. Any breach of range would help in predictability and bring more transparency, avoiding speculation.

In all, the government must come up with measures to support the growing of oil seeds to prevent such hikes in essentials. 

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