New Delhi : The central government has reduced the import duty on soybean, palm and sunflower oil. As a result, the prices of edible oil in the retail market may drop during the festive season, predicts the Indian Vegetable Oil Producers Association (IVPA), an industry body.
India meets about 60 percent of its total edible oil requirement through imports. The government on Wednesday reduced basic customs duty (BCD) on crude sunflower oil from 10 per cent to zero. Meanwhile, the BCD on refined sunflower oil has been reduced from 32.5 percent to 22.5 percent. The BCD on crude soybean oil and palm oil has been reduced from 10 percent to five percent and the BCD on refined soybean oil and palm oil from 32.5 percent to 27.5 percent.
The decision to reduce customs duty on imports of certain edible oils comes at an important time as the festive season approaches. Lower import duty will bring down the cost of imported edible oil, which may bring some control on consumer prices, IVPA President Sudhakar Desai opined. He said that
Demand for palm oil will decrease
The IVPA President noted that India is still heavily dependent on imports for its edible oil needs. The domestic market is therefore sensitive to international edible oil prices and global supply conditions. Greater flexibility in imports of sunflower oil and soybean oil may reduce demand for palm oil. Palm oil is expected to remain relatively expensive due to the implementation of the B50 biofuels mandate and the slowdown in growth in the cultivated area.
What is the effect of duty reduction?
The impact of any duty reduction at the consumer level will depend on a number of factors other than customs duties. These include international commodity prices, freight costs, exchange rate changes, domestic availability and inventory levels.
Sunflower more affordable
Ensuring adequate availability across the country during the upcoming festive months is the immediate priority of the edible oil industry. Improved tariff structure is also important in terms of demand dynamics. The duty reduction on sunflower oil is more significant, making it more affordable, especially in the major consumer region of southern India, Desai said.
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