25th May 2022 (6 Topics)
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Govt. scraps import duties on sunflower, soyabean oil
Context
In a bid to cool inflation in edible oils, the Centre recently allowed duty-free import of 20 lakh metric tonnes each of crude soyabean oil and crude sunflower oil for this year as well as 2023-24.
About
- The government scrapped customs duty and agriculture infrastructure development cess on the import of crude soyabean oil and crude sunflower oil for 20 lakh metric tonnes each per year to ease local prices.
- The duty-free import of 20 lakh MT per year will be applicable for two fiscals, 2022-23 and 2023-24, for crude soyabean oil and crude sunflower oil.
- This would mean till March 31, 2024, a total of 80 lakh MT on crude soyabean oil and crude sunflower oil could be imported duty free.
- The exemption will help cool domestic prices and control inflation. "This will provide significant relief to the consumers.
Consumption & imports
- Of the 20-21 million tonnes of edible oil that India consumes annually, around `4-15 mt is imported.
- India is second only to China (34-35 mt) in terms of consumption of edible oil. Palm oil (45%) is the largest consumed oil, mainly used by the food industry for frying namkeen, mithai, etc, followed by soyabean oil (20%) and mustard oil (10%), with the rest accounted for by sunflower oil, cottonseed oil, groundnut oil etc.
- Crude and food-grade refined oil is imported in large vessels, mainly from Malaysia, Brazil, Argentina, Indonesia etc.
- Given the heavy dependency on imports, the Indian edible oil market is influenced by the international markets.
- Home-grown oilseeds such as soyabean, groundnut, mustard, cottonseed etc find their way to domestic solvent and expellers plants, where both the oil and the protein-rich component is extracted. The latter is an exportable commodity.
Need of such a move?
- India is one of the world’s largest vegetable oil importers and relies on imports for 60 percent of its needs.
- The country has already scrapped base import levies on most cooking oils, including palm oil and soybean oil, and imposed inventory limits to prevent hoarding.
- A rise in price across all items from fuel to vegetables and cooking oil pushed WPI or wholesale price inflation to a record high of 15.08 per cent in April and retail inflation to a near eight-year high of 7.79 per cent.
- High inflation prompted the Reserve Bank to hold an unscheduled meeting to raise the benchmark interest rate by 40 basis points to 4.40 per cent.
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