The Hindu Business Line : Will Govt effect changes in vegoil tariff value?

IT is December 15 and the vegetable oil market has started to speculate whether or not there would be any change in tariff values for palm and soya oils.

The Government effected changes in tariff values thrice - 1st and 15th of the month - during the last two months; but for some undisclosed reason chose to skip December 1.

Going by market conditions, there surely is a case for reduction of tariff values for vegetable oils.

For instance, the current market price - prevailing for the past 10 days - of crude palm oil is between $375 and $385 a tonne c.i.f. east coast and west coast respectively, whereas the tariff value is $433.

In other words, importers are paying Customs duty of over $40 a tonne over and above the market price - 80 per cent duty on an average differential of $50 between market price and tariff value.

However, the Government may choose not to reduce the base price, for, other considerations could come into play.

A reduction in tariff values at this point of time would, of course, cause further pressure on the existing price level.

The fortnightly announcement of tariff values was a refreshing change from the previous practice; but once again, uncertainty at this point of time is seen encouraging speculation.

The Finance Ministry must come clean on this issue and not create avoidable uncertainty.

In addition, the basis of tariff value calculation or changes therein should become transparent.

There is no reason why the Government should not make the criteria for tariff value changes open.

The secrecy is uncalled for when the Indian economy is integrating with the global economy and players in the market have a right to know whether Government action is justified.