‘Slashing customs duty on edible oils counter-productive’

Our Bureau Ahmedabad | Updated on January 30, 2020

Low customs duty deepens India’s dependence on imported edible oil   -  STRINGER/INDONESIA

SOPA raises concerns over possible cut in import duty

Edible oil trade body has voiced concern over move to reduce the customs duty on edible oil imports, terming it an exercise against national interest.

In a letter to the Union Commerce Ministry, the Soybean Processors Association of India (SOPA) has stated that edible oil import over the years at low custom duty has discouraged Indian farmers from growing oilseeds and dissuaded them from making any efforts towards increasing productivity. This has resulted in India’s continued dependence on imported edible oil. Such imports have kept edible oils prices low, making it un-remunerative to grow oil seeds.

Edible oil import bill

“India’s edible oil import bill is already over ₹75,000 crore per annum and with rising demand and population, this will further increase, unless all steps are taken to increase oilseed production in the country. Keeping edible oil prices slightly higher is, therefore, absolutely necessary to increase oilseeds production,” DN Pathak, Executive Director, SOPA, said in the letter.

It also noted that ever since the hike in customs duty on edible oils over the last two years, there has been a considerable increase in the prices of soyabean and other oilseeds, resulting in better returns to farmers.

The letter added that edible oils have a very small share in the household food bill, so a slightly higher price does not have any significant impact on them.

“We feel that in view of the reasons given above, any move to reduce customs duty on edible oils will be totally counter-productive and not in the national interest. It will only help the import lobby at the cost of the Indian farmers and local crushing industry,” the letter said, adding that it should be raised to 45 per cent on crude soybean oil, which is the WTO-bound rate, and on all other soft oils, the duty should be increased to the level of permitted tariff rate.

The letter is sent in connection with a proposal being discussed in the Commerce Ministry for changes in the customs duty on edible oils.

Published on January 30, 2020

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