January 5, 2011

India may not increase import duty on edible oils

Amid rising prices of cooking oil, the Indian government is unlikely to increase import duty on crude and refined edible oils that currently stands at zero and 7.5%, respectively.

"There will not be any increase in import duty of crude and refined edible oils," a senior government official told reporters.

To protect the domestic processors from cheaper imports, industry body Solvent Extractors Association of India (SEA) has been demanding an increase in the import duty on edible oils

However, rising food inflation, which has increased to 14.44% for the week ended December 18, 2010, has forced the government not to tweak the existing duty structure.

Currently with a zero import duty on crude palm oil, the domestic pricing of oil is directly exposed to price fluctuations in palm and soy in the global markets.

Mustard oil and soyoil prices have risen to INR77 (US$1.70) per kilograms each from INR62-72 (US$1.37-1.59) per kilograms in the review period.

India, the world's biggest edible oil buyer, had imported 8.82 million tonnes of vegetable oil from the global market in the 2009-10 oil year period, which runs from November to October.

On Food Subsidy Bill, the official said the subsidy is expected to rise to over 81,000 crore (US$17.9 billion) in the 2010-11 fiscal from last year's INR72,000 (US$15.9 billion) crore due to higher minimum support price and extra allocation of food grains through ration shops.