Govt may slash edible oil import duty
Under intense pressure from Malaysian and Indonesian lobby, the UPA Govt is all set to overhaul the duty structure on edible oil imports.india Updated: Feb 22, 2006 15:08 IST
Under intense pressure from Malaysian and Indonesian lobby, the UPA government is all set to overhaul the duty structure on edible oil imports worth about Rs 17,000 crore annually.
Following recommendations made by the Ashok Lahiri committee on edible oil import, Finance Minister P Chidambaram is likely to restructure the duties in the budget next week. Officials divulged that duty revamp would be aimed at making crude and refined palmolein as well as palm oil imports origi nating from Malaysia and Indonesia cheaper and restrict the soybean oil imports from US, Cana da and Brazil. The proposed duty reduction is also expected to depress the retail domestic prices by 10 to 15 per cent.
The Finance Ministry proposal comes at a time when the rabi season mustard oil seeds and refined oil are expected to hit the market in the next ten days. The first casualty will be rapeseed or mustard oil, resulting in lower incomes for farmers. The prices of other edible oils are also likely to soften up.
The proposed realignment in duties will also enhance the imports from Malaysia and Indonesia during the next fiscal. About 50 per cent of domestic demand is met through imports. The cheaper imports are bound to further suppress any pick-up in domestic pro duction of oil seeds and crushing.
The proposed cut in duty will also result in reversing the gradual increase in share of soybean oil imports over the last few years. Citing the duty differential between various edible oil imports, the Ashok Lahiri committee recommended reduction in duties on different products like palmolein and palm oil by 10 to 20 percent. For most crude edible oil imports, the duty may be pegged at 65 per cent as against proposed 72.5 per cent for refined oil imports in consonance with recommendations of the Lahiri committee report.
Ashok Lahiri committee has argued that higher soyabean oil prices and lower revenue realisation from its imports has led to a revenue loss of about Rs 5,357 per tonne. Agriculture Ministry has vetoed this report and did not accept the arguments put forth in Lahiri committee report, thereby bringing out the differences with Finance Ministry approach.
Lahiri panel says... Inverted duty structure on vanaspati should be reversed Wide depression in rates across various edible oils be corrected Stable duty structure for next five years Prune the duty differential between soyabeen and Palm oil Revisit excise duty on edible oil while realigning impost on processed food.
First Published: Feb 22, 2006 13:36 IST