India is one of the largest importer of edible oils as its domestic production is unable to meet its domestic demand. The Country has to rely heavily on imports to meet the gap between demand and supply. Around 56-60% of the edible oils consumed in the country is met through imports. International prices of Edible Oils are under pressure due to shortfall in global production and an increase in export tax/levies by the exporting countries. Therefore, domestic prices of Edible Oils are dictated by the prices of imported oils.
As the international price trends govern the domestic prices, the prices of edible oils in the country have been ruling very high for the past one year. This has been a major cause of concern for the Government. The Government has taken several steps to rein in the prices and provide relief to consumers reeling under unprecedented inflationary circumstances. In a bid to reign in the continuous rise in cooking oil prices for the past year, the basic duty on Crude Palm Oil, Crude Soyabean Oil and Crude Sunflower Oil has been cut from 2.5% to Nil. The Agri-cess on these Oils has been brought down from 20% to 7.5% for Crude Palm Oil and 5% for Crude Soyabean Oil and Crude Sunflower Oil.
Consequent upon the above reduction, the total duty is now 7.5% for Crude Palm Oil and 5% for Crude Soyabean Oil and Crude Sunflower Oil. The basic duty on RBD Palmolein Oil has been slashed to 12.5% from 17.5% recently. The basic duty on Refined Soyabean and Refined Sunflower Oil has been slashed to 17.5% from the current 32.5%. Before reduction, the agricultural infrastructure cess on all forms of Crude Edible Oils was 20%. Post reduction, the effective duty on Crude Palm Oil will be 8.25%, Crude Soyabean Oil and Crude Sunflower Oil will be 5.5% each.
Apart from rationalizing import duties on palm oil, sunflower oil and soyabean oil, futures trading in mustard oil on NCDEX has been suspended and stock limits on oils and oilseeds have been imposed. Despite international commodity prices being high, interventions made by Central Government and State Governments’ proactive involvement have led to reduced prices of edible oils. Edible oil prices are higher than a year ago, but there is a declining trend from October onwards. Further, the Government is taking steps to improve the production of secondary edible oils, especially rice bran oil to reduce the import dependence.
The department regularly interacts with the oil industry associations and leading market players and has convinced them to reduce the MRP, which will translate to passing on duty reduction to end consumers. As per the trend from 167 price collection centers, edible oil prices have declined quite significantly in the range of Rs 5 and 20 per kg in the major retail markets across the country. Major edible Oil players, including Adani Willmar and Ruchi Industries, have cut prices by Rs 15 -20 Per Ltr. The other players that have reduced the prices of edible oils are Gemini Edibles & Fats India, Hyderabad, Modi Naturals, Delhi, Gokul Re-foils and Solvent, Vijay Solvex, Gokul Agro Resources and N.K. Proteins.
The latest step taken by the Government for controlling the prices of various oils is concerning Soya meal. Stock limit on Soya Meal, a major protein source and constitutes almost 30% in Livestock Feed, has been imposed with effect from 23rd December, 2021 till June 2022 by including it in the Schedule to Essential Commodities Act, 1955. This will cool down the prices and improve supply. The Govt has also suspended futures trading in all essential commodities for a period of one year, upto December 2022.
The Govternment has also initiated certain long-term and medium-term plans to attain self-sufficiency in edible oils. Recently, the National Mission on Edible Oils – Oil Palm (NMEO-OP) a new Centrally Sponsored Scheme with a special focus on the North east region and the Andaman and Nicobar Islands has been launched. Due to the heavy dependence on imports for edible oils, it was important to increase the domestic production of edible oils in which increasing area and productivity of oil palm plays an important part.
Overall, the reduction in import duty and other steps like imposition of stock limits to curb hoarding etc. has helped cool down domestic prices of all edible oils and granted much-required relief to the consumers.