The Government may soon hike the import duty on refined palm oil (mainly refined, bleached and deodorised or RBD palmolein). The current duty is 7.5 per cent.
“A notification in this regard is expected as soon as next week,” a senior Finance Ministry official told Business Line . The intention is to widen the import duty difference between crude palm and refined oil, which the industry has been demanding for some time.
With 2.5 per cent duty on crude palm oil, the current duty differential is 5 per cent. This has resulted in higher import of cheap refined oil, making things difficult for domestic refiners.
This issue was discussed in a recent meeting of the Finance Ministry with the Commerce Ministry, the Agriculture Ministry, the Food Ministry and the Food Processing Ministry. The meeting was called to discuss steps that could be taken to alleviate the problems being faced by domestic refiners, who are operating below capacity.
Although, the industry wants a duty hike on crude palm oil too, the consensus at the moment seems to be on raising duty on refined oil only. Though the quantum of duty hike is yet to be decided, the official said it would, in probability, satisfy the refiners.
The industry has demanded that the duty differential between refined and crude oil should be at least 14 per cent for the domestic refining industry to be sustainable.
The proposed duty hike assumes significance as it would protect the interests of farmers, who have planted a record area under oilseeds such as soyabean. The acreage of groundnut and sunflower are also higher than last year on good monsoon across the country.
The Solvent Extractors Association of India has been demanding an increase in duties on refined palm oil to 20 per cent.
Edible oil imports
B.V. Mehta, Executive Director of the association, said that the rising trend of refined oils imports on a month-on-month basis, as witnessed in the past few months, was worrisome.
Domestic refiners were turning into packers of imported refined oils, Mehta said, highlighting the need for a hike in import duty to protect the huge investments in refineries.
Total edible oil imports in the current year (November-June) were up 11 per cent at 6.94 million tonnes (mt).
The imports of refined oils stood at 1.54 mt during the November 2012 -June 2013, about 27 per more than corresponding last year.
Import of refined oils, which traditionally account for a tenth of total edible oil imports, touched a high of 44 per cent in May 2013.
In the first eight months of the oil year, starting November 2012 till June 2013, refined oils constituted 22 per cent of total edible oil imported.