Wednesday, 07 December 2022

Govt Cut import duty on refined palm oil to 12.5% from 17.5%

Govt Cut import duty on refined palm oil to 12.5% from 17.5%

Worried over high prices of cooking oils, the government has reduced the essential customs duty on refined palm oil from 17.5 percent to 12.5 percent till March next year to improve domestic supplies and bring down rates in the domestic retail markets.

With a reduction in the essential custom duty (BCD), the effective levy (including social welfare cess) on both refined palm oil and refined Palmolive will come down to 13.75 percent from 19.25 percent, according to the (SEA) Solvent Extractors' Association of India.

On Monday evening, the Central Board of Indirect Taxes and Customs (CBIC) issued a notification that "set to reduced BCD on refined palm oil and its fractions to 12.5 percent from 17.5 percent till 31st March, 2022". The new rate is effective from Tuesday.

The retail average prices of groundnut oil on Monday was at ₹181.48 per kg, vanaspati at ₹138.5 per kg, mustard oil at ₹187.43 per kg, soyabean oil at ₹150.78 per kg, palm oil at ₹129.94 per kg, and sunflower oil at ₹163.18 per kg, as per data available with consumer affairs ministry.

Reacting to the duty cut, SEA President Atul Chaturvedi on Tuesday said: "The announcement of reducing import duty on palm olein ( refined Palm) percent25 percent to 13.75 percent without together reducing import duty on CPO has the future to increase the imports of refined palmolein at the cost of CPO which is the raw material for our refineries."

He said.

"This is clashing to our principle of Aatma-Nirbharta and may harm employment generation and value addition within country,"

SEA Executive Director B V Mehta felt that the imports of refined palm oil would increase as duty difference with Crude Palm Oil (CPO) has come down to only 5.5 percent now. The compelling duty on CPO is 8.25 percent at present.

Govt Cut import duty on refined palm oil to 125 from 175 1pixabay image

Read More: Edible oil prices reduced by 8-10 per kg in the last 30 days may drop further

Besides reducing the BCD on refined palm oil, the government decided to allow traders to import palm refined oil without a license for one more year till December 2022. Market regulator SEBI banned the launch of new derivative contracts of crude palm oil and a few other agricultural commodities.

All these calculations have been implemented when wholesale inflation is ruling high.

The government has cut import duties on both refined and crude edible oils several times this year to rein in edible oil prices. The government made the last reduction on import duty on 14th October.

Earlier today, the commerce ministry said traders would be allowed to import 'refined, bleached deodorized (RBD) palm oil' and 'refined, bleached deodorized palm olein without a license for one more year till December 2022.

According to the SEA, India's dependence on imported edible oils is nearly 65 percent of the complete consumption of about 22 to 22.5 million tonnes. The country imports around 13 to 15 million tonnes to achieve the demand of domestic supply.

For the last two marketing years, the imported quantity reduced to nearly 13 million tonnes from November to October due to the pandemic.

During the 2019-20 oil marketing year, the import dropped to 13.2 million tonnes valued at about ₹71,600 crores.

In 2020-21, India imported the same quantity, but the import bill jumped by 63 percent and touched an alarming level of ₹1.17 lakh crore due to a hike in international prices of edible oils, SEA had said earlier.

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