The central government has reduced the import duty on refined soybean and sunflower oils from 17.5 per cent to 12.5 per cent with effect from Thursday, said a Finance Ministry notification. India usually imports ‘crude’ soybean and sunflower oil, not their ‘refined’ form. Nevertheless, the government has reduced the duty on refined soybean and sunflower oil.
With this reduction, the effective duty on refined edible oils has gone up to 13.7 per cent, including social welfare cess. The effective duty on all major crude edible oils is 5.5 per cent. Basic import duty on refined soyabean oil and refined sunflower oil has been reduced from 17.5 per cent to 12.5 per cent with effect from today.
This will be applicable till March 31, 2024,” the food ministry said in a statement.
Significance of Basic Import Duty
Basic import duty is an important factor affecting the landed cost of edible oils, which in turn affects domestic prices. The reduction in import duty on refined sunflower and soybean oils will benefit consumers as it will help bring down domestic retail prices.
It added that the decision is expected to accelerate the measures already taken by the government to bring down the prices of edible oils in the domestic market. In October 2021, the import duty on these two edible oils was 32.5-17.5 per cent at a time when international prices were very high, which was also reflecting in domestic prices.
The ministry also said that it is closely monitoring the prices of edible oil in the country and ensuring its adequate availability to the consumers. Commenting on this, BV Mehta, executive director, Solvent Extractors Association of India (SEA), said the move may have some temporary impact on market sentiment, but is unlikely to attract imports.
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“Basically, the government wants to keep the prices of edible oils under control. Despite the low duty differential between crude and refined soya and sunflower oils, shipments of refined soya and sunflower oils are likely to be commercially unviable But there is some temporary sentiment impact on the market,” Mehta said in a statement.
Soybean, sunflower sowing affected by delay in monsoon
Currently, there is no import of refined soybean and sunflower oil. According to SEA, the delay in onset of monsoon over Kerala by a week led to delay in sowing.
Mehta said, “The Meteorological Department has forecast a near normal monsoon, however, El Nino has not been completely ruled out and it may spoil the chances of a normal monsoon, which will help in the kharif crop and the next oil year. May affect domestic availability of vegetable oils in 2023-24.” ,
It must be mentioned here that India is dependent on imports to meet its demand-supply gap in edible oils. It meets about 60 per cent of its edible oil demand through imports.
(With PTI inputs)