- The BCD on refined palm oil has been reduced from 17.5% to 12.5%.
- Traders can import it without a license till December 2022.
- The prices, however, are expected to remain 25% to 30% higher than in 2019.
- According to SEA, the effective levy on both refined palm oil and pamoline will come down to 13.75 per cent.
The Central Board of Indirect Taxes and Customs (CBIC) has issued a notification that “seeks to reduce BCD on refined palm oil and its fractions from 17.5 per cent to 12.5 per cent till March 31, 2022”. The new rate is effective from Tuesday. This was done in an effort to increase domestic supplies and bring down the retail prices of cooking oil.
The latest move also comes on a day when the government decided to allow traders to import refined palm oil without a licence for one more year till December 2022 and markets regulator banned the launch of new derivative contracts of crude palm oil and a few other agricultural commodities.
All these measures have been put in place at a time when inflation is ruling high.
On Monday, the average retail prices of groundnut oil stood at Rs 181.48 per kg, mustard oil at Rs 187.43 per kg, vanaspati at Rs 138.5 per kg, soyabean oil at Rs 150.78 per kg, sunflower oil at Rs 163.18 per kg and palm oil at Rs 129.94 per kg, as per the data available with the consumer affairs ministry.
Sandeep Bajoria, CEO of Sunvin Group, an intermediary and a consulting company, earlier said, “We expect prices of soybean, sunflower and palm oils to decline further by Rs7-8/kg after March, while the price of mustard oil is expected to decrease to Rs 150/kg from the current price of Rs 170/kg. The high of mustard oil was Rs 185/kg.
According to Solvent Extractors’ Association of India (SEA) Executive Director B V Mehta, with a reduction in the duty, the effective levy on both refined palm oil and pamoline will come down to 13.75 per cent, including social welfare cess, from 19.25 per cent.
On the duty cut, Mehta said imports of refined palm oil will increase as duty difference with Crude Palm Oil (CPO) has come down to only 5.5 per cent. The current effective duty on CPO is 8.25 per cent.
Earlier in the day, Finance Minister Nirmala Sitharaman told the Lok Sabha, “we will attend to the problem of edible oil price and also some of the essential edible items”.
In order to rein in the prices of edible oil, the government has cut import duties on both refined and crude edible oils several times this year. The last reduction on import duty was done by the government on October 14.
Mehta also said the cut in duty will hurt domestic palm oil refineries.
Earlier in the day, the commerce ministry said traders will be allowed to import ‘refined bleached deodorized palm oil’ and ‘refined bleached deodorized palmolein’ without a licence for one more year till December 2022.
According to the SEA, India’s dependence on the import of edible oils is nearly 65 per cent of the total consumption of about 22-22.5 million tonnes. The country imports 13-15 million tonnes to bridge the gap between demand and domestic supply.
For the last two marketing years (November to October), due to the pandemic, the imported quantity reduced to nearly 13 million tonnes.
Gone is the era of the availability of cheap cooking oils in India. Though the prices are being corrected, it is expected that they will be 25% to 30% more expensive in 2022 as compared to 2019.
“The base level price of cooking oil will not go below Rs 100-105/kg in 2022 as compared with Rs 75/kg in 2019 due to global inflation in commodities, the supply chain constraints and the flow of cheap money chasing commodities,” said Bajoria.
