Through increase in import duty, the government aims to help domestic oilseed crushers and edible oil producers who suffered badly last year due to cheap imports
Prices of edible oils and oilseeds have jumped by up to 8 per cent across all varieties following the government’s decision to increase import duty on crude palm oil and refined edible oil to reduce the country’s dependence on imported oil.
Crude palm oil (CPO) for spot delivery at Kandla was quoted at RS 638 per 10 kg on Monday, as against Rs 592 per 10 kg before the duty hike.
Similarly, refined, bleached and deodorised (RBD) palmolein was sold at Rs 700 per 10 kg at the Kandla port, compared with Rs 654 earlier.
The government on Friday raised the import duty on CPO and RBD palmolein to 44 per cent and 54 per cent, respectively, from 30 per cent and 40 per cent earlier.
Before the first such increase in August 2017, the basic import duty on CPO and RBD palmolein stood at 7.5 per cent and 15 per cent, respectively. In addition, a 10 per cent social welfare cess is levied on the basic duty.
The effective import duty on edible oil, however, is still much lower than the one demanded by the industry – 55 per cent on CPO and 70 per cent on RBD palmolein, with 15 per cent differential duty.
“While palm derivatives have seen an increase in their prices, other variants, including soft oil prices, have also started moving up.
“The quantum of increase, however, cannot be immediately ascertained,” said Atul Chaturvedi, chief executive officer, Adani Wilmar, producer of the Fortune brand of edible oils.
Branded edible oil players have already raised their product prices by up to 10 per cent.
With this, edible oil packs with revised prices are set to hit kirana shops or hypermarkets in a couple of days.
“The duty increase will force importers and refiners who had refrained from increasing the consumer price of this sensitive commodity to pass on the increased cost of import and revise retail prices upwards by around 10 per cent,” said a spokesperson for Ruchi Soya Industries, the producer of edible oil brands such as Mahakosh, Ruchi Gold, Sunrich.
Through the increase in import duty, the government aims to help domestic oilseed crushers and edible oil producers who suffered badly last year due to cheap imports.
Oilseed farmers and stockists held large quantities of soybean uncrushed due to low viability.
The soybean farmers’ realisations, therefore, remained lower in the kharif harvesting season 2016, which reflected in its sowing in 2017.
Soybean output declined by nearly 25 per cent last year to 8 million tonnes from 10 million tonnes in the previous year.
At the same time, India’s dependence on imported edible oil had increased to an alarming level of 70 per cent towards the end of 2017.
Photograph: Rupak De Chowdhuri/Reuters