Buckling under pressure from the domestic edible oil sector, the Government has decided to impose a 2.5 per cent duty on imports of crude edible oils.

The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved the levy of import duty, which has been done with the objective to shore up the price payable to farmers for fresh fruit bunches of oil palm, which is linked to the landed price of crude palm oil (CPO).

With enhanced duty on CPO, price payable to farmers will increase by around Rs 150 a tonne, an official statement said.

The impact of the enhanced duty on prices of edible oils would be negligible at less than Re 1 a kg, the Government said.

The price may be further moderated on account of the huge stocks of palm oil in Malaysia and Indonesia, which may force these countries to lower the export duty currently levied in an effort to boost their exports.

At present, all refined oil imports are taxed at 7.5 per cent, while crude edible oil imports are duty-free.

The domestic industry led by the Solvent Extractors Association of India has been demanding a levy of 10 per cent tax on crude palm oil and raise the tax on refined, bleached and deodorised palmolein to 20 per cent for some time now.

tariff defreeze

The CCEA also approved a plan to defreeze the tariff values of all edible oils, palm oil – crude and refined, and soyabean oil – crude and notify their tariff values on the basis of their prevailing international prices.

An alignment of notified tariff values with international prices will have a positive impact on the duty collected from import of edible oils and will provide an even-field to the domestic refining industry, the statement said.

rising imports

Edible oil imports have been on the rise on growing domestic consumption.

For the oil year ending October 2012, India’s imports stood at almost 10 million tonnes.

The edible oil imports were up 35 per cent in December 2012 at 9 lakh tonnes over corresponding period last year’s 6.69 lakh tonnes.

Vishwanath.kulkarni@thehindu.co.in