Center cuts duty on crude palm oil by 5% to lower edible oil prices

Move to support its availability at lower prices for the domestic consumer
Center cuts duty on crude palm oil by 5% to lower edible oil prices
Food inflation including high prices of edible oils has been a cause of concernPhoto - Jcomp via freepik

To bring relief to the consumers and reduce the edible oil prices, the center has reduced the duty on crude palm oil (CPO) by 5%.

Further, to cool down the prices of RBD Palmolein (Refined Palm oil), the Department of Food & Public Distribution (DFPD) has recommended removing the restriction on import of RBD Palmolein and putting it in the open general category of imports. According to the official press note, these moves are expected to lower the prices of edible oils for domestic consumers.

The major edible oils consumed in the country are mustard, soybean, groundnut, sunflower sesame oil, niger seed, safflower seed, castor and linseed (primary source), and coconut, palm oil, cottonseed, rice bran, solvent extracted oil, tree and forest origin oil. The total domestic demand for edible oils in the country is approximately 250 LMT per year. Around 60% of the demand for edible oils consumed in the country is met through imports. Palm oils (Crude + Refined) import constitutes around 60% of the total edible oil imported, out of which 54% is imported from Indonesia and Malaysia. As the country has to depend heavily on imports to meet the gap between demand and supply, international prices impact the domestic prices of edible oils.

Food inflation, including high prices of edible oils, has been a cause of concern. Therefore, the Government has been monitoring their prices and taking steps by removing bottlenecks to soften prices. A mechanism was institutionalized involving nodal offices of the customs department, FSSAI, plant quarantine division to monitor the speedy clearance of food commodities like pulses and Crude Palm Oil (CPO) at shipping ports. The international prices of crude edible oil and refined palm oil showed a declining price trend over the past month. Still, the prices of domestic refined palm oil and crude edible oil remained high.

The Government, keeping in view the consumer interest due to rising prices of edible oil, has reduced the duty on CPO duty by 5%. Further, to cool down the prices of RBD Palmolein (refined Palm oil), DFPD recommended removing the restriction on import of RBD Palmolein and putting it in the open general category of imports to support its availability at lower prices for the domestic consumer.

Ministry of Finance vide Notification No. 34/2021-Customs dated 29 June 2021 has cut duty on CPO to 10% from 15% with effect from 30 June 2021 and this will remain in force up to and inclusive of the 30 September 2021. The reduction will bring down the effective tax rate on CPO to 30.25% from the earlier 35.75%, including additional agri-cess of 17.5% and 10% social welfare cess. This reduction, in turn, will bring down the retail prices of Edible Oils.

Further, the Department of Commerce vide Notification No. 10/2015-2020 dated 30 June 2021 has issued a revised import policy for Refined Bleached Deodorized (RBD) Palm Oil and RBD Palmolein both from restricted to free category. This would be effective with immediate effect and for a period up to 31 December 2021.

Making India “AtmaNirbhar” in edible oils is our cherished goal and National Oilseeds mission is committed to achieving it by aligning policies, including foreign trade. The Government has reduced duty until September 2021 to signal farmers that their interests shall not be compromised. The Government will be monitoring the prices daily expects the industry to pass on full benefits to the consumers.

Photo attribution - <a href='https://www.freepik.com/photos/bottle'>Bottle photo created by jcomp - www.freepik.com</a>

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