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Coming to the aid of domestic oilseeds farmers and the processing industry, the government has hiked the import duty on crude and refined edible oils by 5 percentage point each. But, the industry is far from satisfied, as it believes that the hike is insufficient to prevent cheap overseas purchases.
As per the Central Board of Excise and Customs notification issued on Friday, duty on crude edible oil has been raised from 7.5 per cent to 12.5 per cent and from 15 per cent to 20 per cent on refined varieties.
“We welcome the decision to raise import duty rates, but it is not enough to help farmers or domestic refiners. The industry’s demand to create a larger duty differential between crude and refined oils by at least 10 per cent was not taken up,” said BV Mehta, Executive Director, Solvent Extractors’ Association (SEA).
The industry had pitched for a duty hike to 25 per cent and 45 per cent on crude and refined edible oil categories, respectively.
“The total impact in terms of duty could have been ₹ 2.60 per kg but the market will move just 70-80 paisa. This was a good opportunity to impose higher rates since it will have generated more revenue at a time of when global prices are possibly lowest in a decade,” Mehta added.
The increase in import duty follows a meeting held earlier this week between officials from the Ministries of Commerce, Food and Consumer Affairs, and Agriculture and Hasmukh Adhia, the Revenue Secretary to review the situation.
Senior Congress leader Ahmed Patel had also written to the Finance Minister Arun Jaitley in which he pitched for the import duty hike to protect farmers.
“As it stands, the import duty is too low for refined oil not to be coming in at a time when capacity utilisation is poor. Farmers will not get remunerative prices and will lose interest in the oilseed crop,” said Mehta.
As per SEA estimates, edible oil imports are likely to touch 14 million tonnes (mt) in the current year (November to October) from 11.6 mt last year. Between November 2014 and August 2015, imports are pegged at 11.56 mt.
The total import bill this year could touch $14 billion, according to Assocham, particularly due to lower oilseeds production on the back of an El Nino-hit deficit monsoon.
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