Government Reduces Import Duty on Edible Oils to Combat Inflation
Significant Reduction in Import Duty
In a recent move aimed at alleviating the financial burden on citizens grappling with rising prices, the central government has slashed the basic customs duty (BCD) on imports of crude edible oils such as sunflower, soybean, and palm oil to just 10%. Previously, this duty stood at 20%. This decision is expected to not only lower retail prices of cooking oils but also invigorate the domestic refining industry. The government has emphasized that the primary goal is to provide direct benefits to the public.
Encouraging Domestic Refining
Following the latest amendment, there is now a duty differential of 8.75% to 19.25% between crude and refined oils. This disparity is intended to incentivize the domestic refining sector. The government aims to enhance the utilization of India's refining capacity and reduce reliance on imported refined oils, thereby strengthening the local refining industry and ensuring better prices for farmers' produce.
Guidelines for Oil Companies
The Ministry of Consumer Affairs, Food and Public Distribution has instructed all edible oil companies to ensure that the duty reduction benefits consumers. Companies are encouraged to adjust their maximum retail prices (MRP) on a brand-by-brand basis and modify the price to dealers accordingly. Additionally, the ministry has convened meetings with oil associations to establish a weekly reporting system for updated MRP information to monitor whether consumers are indeed receiving the intended relief.
Impact of Rising Oil Prices
The surge in edible oil prices in the domestic market was largely attributed to international price hikes and the impact of duty increases in September 2024, which added to the inflationary pressures on consumers. With the recent duty cuts, the government anticipates that the public will experience relief and that inflation will be curbed. Experts suggest that lower duties on crude oil will likely lead to a decrease in imports of refined palm oil, thereby bolstering the domestic refining industry.
Call for Responsibility Across Supply Chain
The government has made it clear that the benefits of this relief will only materialize if all parties involved in the supply chain act responsibly. Refining companies, wholesalers, and retailers are urged to implement prompt and transparent price reductions to ensure timely relief for consumers.
By Siddharth Jain
Journalist, Jaipur