The Centre has increased the import duty on crude and refined soft edible oils such as soy oil, sunflower oil and rapeseed on Thursday. Duty on crude soft edible oils has been hiked to 35 per cent and on and soft oils to 45 per cent.

Earlier, crude soy oil attracted an import duty of 30 per cent, and sunflower and rapeseed 25 per cent. Refined variants of all these three edible oils attracted 35 per cent. The latest duty hike, coinciding with the start of the kharif sowing season, is aimed at curbing cheaper imports. This, in turn, could translate into better prices for the farmers.

The Solvent Extractors Association’s efforts have yielded results, said B V Mehta, Executive Director of the apex trade body of the edible oil industry. The government has however, kept the import duty on crude and refined palm oils unchanged.

On March 1, 2018, Centre had increased import duty on Crude Palm Oil , RBD Palmolein and RBD Palm Oil. As a result, import duty on CPO increased to 44 per cent from 30 per cent (effective duty 48.4 per cent) and RBD Palmolein and Refined Palm Oil to 54 per cent (40 per cent), (effective duty 59.4 per cent. The duty hike led to a slowdown in palm oil imports in May, while the inflow of sunflower and soybean oils increased.

Data compiled by the Solvent Extractors Association of India (SEA) revealed that palm oil (including RBD Palmolein, CPO and CPKO) imports during May 2018 stood at 4.96 lakh tonnes (lt), as against 7.78 lt in April 2018, a decline of 36 per cent.

Unprecedented low

“For the first time in the history, the share of palm oils in the overall vegetable oils has dropped to 40 per cent, against the norm of around 58-70 per cent earlier. The share of soft oils has increased to 60 per cent. This is mainly because of the high import duty on palm oils and low duty on soft oils,” Mehta, said.

Apart from the duty structure, rupee depreciation and credit crunch in the market have also contributed to the slow down in imports, he said

Soft oils grow

Soft oils import and sunflower oil import are highest in any single month since India started importing edible oils in 1994.

The data also reveals that import of sunflower oil during May jumped to highest in past seven months to 3.30 lt, as compared with 2.94 lt in April. Also, soybean oil imports recorded a sharp jump in May to 3.96 lt (2.64 lt).

Industry players maintained that going forward, the prices may remain under pressure due to a record domestic stock of vegetable oils. The stock of edible oils as on June 1, 2018 at ports and in the pipeline is reported at 26.62 lt, up by 3.24 lt from 23.38 lt in May 2018. India’s total demand for edible oils during 2017-18 is estimated at 23 lt.

India’s monthly requirement is about 19 lt and operates at 30 days’ stock against which currently holding stock of 26.62 lt equal to 42 days’ requirements. This is the ever highest stock putting pressure on domestic prices of edible oils, SEA noted in a statement.

Overall imports down

Overall import of vegetable oils during May 2018 is reported at 12.86 lt as compared to 13.84 lt in May 2017, down by 7 per cent on year-on-year basis.

The overall import of vegetable oils during the period November 2017 to May 2018 is reported at 86.04 ltcompared to 85.22 lt, up by one per cent.

During November 2017-May 2018, overall palm oil import has decreased to 50.70 lt from 51.05 lt, while soft oils import increased to 33.22 lt from 32.16 lt during the same period of last year.

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