Centre cuts palm oil duties, eases imports to cushion prices
The Union government has cut duties on palm oil by 5% and lifted restrictions on the import of refined palm oil to ease edible oil prices, which had more than doubled in April and May in the highest surge in prices in years.
India meets two-thirds of its domestic edible oil requirements through imports, as global prices rallied in recent months due to bad crops and higher demand.
Palm is one among several edible oils, such as soy oil, India imports. Recent increases in edible oil prices had pinched household budgets hard.
On June 18, the HT had reported that the government was examining a proposal to cut edible oil duties to make it cheaper, even though the government was averse to taking a “hasty decision” on cutting import duties on edible oils, quoting an official as saying.
Cutting import duties can lower prices instantly. Edible oil is India’s third most high-value import, after crude oil and gold.
India typically imports from producers such as Malaysia, Indonesia Brazil, Argentina and Russia.
Currently, India’s levies on edible oil imports ranges between 32.5% (for palm oil, the cheapest edible oil) and 35% for soybean oil.
India produces about 11 million tonne of edible oil but consumption is growing and stands at about 24 million tonne.
According to official data, the share of rural and urban consumption in total is 3.8% and 2.7%. Much of the demand comes from commercial users. For instance, most biscuit and snack makers use palm oil for their products.
India has to rely on edible oil imports because farmers typically grow more cereals, of which there is a glut, than oilseeds, which are scarce, because the government effectively guarantees prices for cereals through large-scale procurement, which refers to the buying of farm produce at federally fixed minimum support prices.