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G. Chandrashekhar

Mumbai , Oct. 17

THE Ministry of Finance has raised the tariff values on various edible oils on Friday morning vide Customs notification 88/2003. For the palm complex, hike in tariff values ranged from a low of $25 a tonne for refined palm oil to a high of $40 a tonne for crude palm oil.

A new category "other palm oil" has been introduced for the first time with tariff value at $438 a tonne. This is expected to take care of oil that does not meet the acid value and carotenoid standards stipulated with effect from August 1 this year. In case of crude soyabean oil, the tariff value has been raised by $54 tonne.

The vegetable oil market — both domestic and overseas — witnessed little impact following upward revision of tariff values. Malaysian market virtually ignored the Indian decision, unlike in the past when Indian tariff hikes led to a downward adjustment in origin prices.

Indeed, the palm complex continues to rule firm — contrary to expectation — supported by falling inventory and strong soya oil values. Currently, for November/December, refined palmolein is offered at around $515 a tonne c.i.f India; and for first quarter 2004, the rate is $15 a tonne lower. Similarly, crude palm oil is offered at $475 a tonne for Nov/Dec and $15 a tonne lower for early next year. De-gummed soyabean oil November shipment is quoted at approximately $640 a tonne c.i.f India, while December shipment is $5 a tonne cheaper, a broker said.

Clearly, the tariff values have failed to reflect the market conditions. It is likely that the Finance Ministry had to consider the political implications of raising tariff values in view of both ongoing oilseeds crop harvest and elections in several States slated for early December.

Overall, players in the market are unanimous in their view that apart from helping raise some revenue, the latest hike will do little else to the market which has been experiencing a firm trend in view of sharp cutback of soyabean crop in the US.

The duty structure for edible oils has never been so complicated. It is unfortunate that the ministry has compounded the confusion by adding one more category "other palm oil" and fixing a tariff value.

In the short-run, it may help expedite clearance of palm oil that does not meet the specified carotenoid value, but too many categories of oil, too many rates of customs duty and too many tariff values are not what the vegetable oil trade needs.

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