Duty on Crude Palm Oil: There is some good news for the common people! In order to provide relief to the consumers and to reduce the prices of edible oil, the central government has reduced the duty on crude palm oil (CPO) by 5 per cent.
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According to a release from the Ministry of Consumer Affairs, Food and Public Distribution, the central government has taken the decision to reduce the duty on CPO by 5 per cent in an attempt to reduce the prices of edible oils. Furthermore, to cool down the prices of RBD Palmolein (Refined Palm oil), the Department of Food and Public Distribution has recommended for the removal of restriction on import of RBD Palmolein, putting it in the open general category of imports.
Now, certain moves are expected to reduce the prices of edible oils for the domestic consumers.
It has to be noted that the major edible oils consumed in the country are mustard, soyabean, 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 of edible oils in the country is approximately 250 LMT per year. Around 60 per cent of the edible oils consumed in the country is met through imports. Palm oils (crude and refined) import constitutes around 60 per cent of the total edible oil imported, out of which 54per cent is imported from Indonesia and Malaysia. As the country has to depend heavily on imports to meet the gap between demand and supply, the international prices have an impact on domestic prices of edible oils.
In addition to this, food inflation including high prices of edible oils has been a cause of concern and therefore the government has been monitoring their prices and taking steps by way of 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 CPO at shipping ports. The international prices of crude edible oil and refined palm oil were showing declining trend in prices over the past one month. Nevertheless, the prices of domestic refined palm oil and crude edible oil remained high.
The Ministry of Finance issued a notification on June 29 stating cut duty on CPO to 10 per cent from 15 per cent with effect from June 30, 2021. This will remain in force up to and inclusive of September 30, 2021. The reduction will bring down the effective tax rate on CPO to 30.25 per cent from earlier 35.75 per cent inclusive of additional agri-cess of 17.5 per cent and 10 per cent social welfare cess. This reduction, in turn, will bring down the retail prices of edible oils.
Furthermore, the Department of Commerce issued a notification on June 30, 2021 where it stated the revised import policy for Refined Bleached Deodorized (RBD) Palm Oil and RBD Palmolein by removing both from restricted to free category. This would be effective with immediate effect and for a period up to December 31, 2021.