Stung by the persistent rise in prices, the government is considering duty cuts in essential commodities. Commerce and Industry Minister Kamal Nath said on Monday that fresh import duty cuts on a few items were in the offing. “We are looking at further cuts. There is an increase in international oil prices and it has to be met with import duty calibration, which we are considering,” Nath said.
The government has already banned the export of edible oil for a year in an effort to boost domestic supply and contain the rising price of vegetable oil. India exported 11,639 tonnes of edible oil in 2006-07. The country also exports small quantities of groundnut, mustard and coconut oils.
India annually consumes about 10 million tonnes of edible oils, with imports contributing half. In February, India’s vegetable oils imports grew by nearly times to 430,000 tonnes from 150,000 tonnes in the previous year. This month the government slashed the import duties on several varieties of edible oil as well as milled and non-milled rice.
The international price of crude palm oil has increased from $770 a metric tonne in the last week of August 2007 to nearly $1,220 in the last week of February 2008, a rise of 58 per cent.
International prices of sunflower oil have increased from $947 to $1,695 a metric tonne, a rise of nearly 79 per cent. The international price of rice has increased 37 per cent over the last six months, from $430 to $590 a tonne.
The government has identified containing inflation as priority and will be willing to sacrifice growth to meet this objective.
After growing at a sizzling 9.6 per cent in 2006-07, India’s gross domestic product growth is expected to slow down this year.