Chennai: India is one of the largest importer of edible oils as its domestic production is unable to meet its domestic demand.
The country has to rely heavily on imports to meet the gap between demand and supply. Around 56-60 per cent of the edible oils consumed in the country is met through imports. International prices of Edible Oils are under pressure due to shortfall in global production and increase in export tax/levies by the exporting countries. Therefore, domestic prices of edible oils are dictated by the prices of imported oils.
As the domestic prices are governed by the international price trends, the prices of edible oils in the country have been ruling very high for the past one year. This has been a major cause of concern for the government.
In order to rein in the prices and provide relief to the consumers who are reeling under unprecedented inflationary circumstances, the government has taken a number of steps. In a bid to reign in continuous rise in the cooking oil prices since past one year, the basic duty on Crude Palm Oil, Crude Soyabean Oil and Crude Sunflower Oil have been cut from 2.5 per cent to Nil. The Agri-cess on these Oils has been brought down from 20 per cent to 7.5 per cent for Crude Palm Oil and 5% for Crude Soyabean Oil and Crude Sunflower Oil.
Consequent upon the above reduction, the total duty is now 7.5 per cent for Crude Palm Oil and 5 per cent for Crude Soyabean Oil and Crude Sunflower Oil. The basic duty on RBD Palmolein Oil has been slashed to 12.5 from 17.5 per cent recently. The basic duty on Refined Soyabean and Refined Sunflower Oil has been slashed to 17.5 per cent from the current 32.5 per cent. Before reduction, the agricultural infrastructure cess on all forms of Crude Edible Oils was 20 per cent. Post reduction, the effective duty on Crude Palm Oil will be 8.25 per cent, Crude Soyabean Oil and Crude Sunflower Oil will be 5.5 per cent each.
Apart from rationalizing import duties on palm oil, sunflower oil and soyabean oil, futures trading in mustard oil on NCDEX has been suspended and stock limits on oils and oilseeds have been imposed. Despite international commodity prices being high, interventions made by Central Government along with State Governments’ pro active involvement have led to reduction in prices of edible oils. Edible oil prices are higher than a year ago period but from October onwards there is a declining trend. Further, the government is taking steps to improve the production of secondary edible oils, especially rice bran oil to reduce the import dependence.
The department is regularly interacting with the oil industry associations and leading market players and has convinced them to reduce the MRP which will translate to passing on the benefit of duty reduction to end consumers. As per the trend from 167 price collection centers, edible oil prices have declined quite significantly in the range of Rs 5 and 20 per kg in the major retail markets across the country.
The latest step taken by the Government for controlling the prices of various oils is with respect to Soya meal. Stock limit on Soya Meal which is a major source of protein and constitutes almost 30 per cent in Livestock Feed has been imposed with effect from 23 December, 2021 till June 2022 by including it in the Schedule to Essential Commodities Act, 1955. This is expected to cool down the prices and improve supply. The government has also suspended futures trading in all essential commodities for a period of one year, upto December 2022.