In a notification dated 31st August 2022, the Central Board of Indirect Taxes and Customs (CBIC) has extended existing concessional import duties on edible goods. The government of India has gone forward with the move to increase domestic supply and keep prices under control.
The concessional customs duty on Edible Oil Import is now extended for another 6 months. The previous deadline was until October 2022, which has been extended to March 2023. Driven by the fall in global prices, edible oil prices have been on a declining trend. The lower import duty would help ease the retail prices in India.
Existing Import Duties
The existing duty structure on crude palm oil, crude soybean oil, crude sunflower oil, RBD palm oil, RBD Palmolein, refined soybean oil, and refined sunflower oil remains unchanged till March 31, 2023. The import duty on crude varieties of palm oil, soyabean oil, and sunflower oil is currently zero.
However, after taking into account 5 percent agric and 10 percent social welfare cess, the effective duty on crude varieties of these three edible oils touches 5.5 percent.
The basic customs duty on refined varieties of palmolein and refined palm oil is 12.5 percent, while the social welfare cess is 10 percent. So, the effective duty is 13.75 percent. For refined soybean and sunflower oil, the basic customs duty is 17.5 percent, and taking into account the 10 percent social welfare cess, the effective duty comes to 19.25 percent.
India and Edible Oils
India is the largest importer of edible oils in the world, followed by China and the US. In 2021, India imported around 13.45 million tons of edible oils worth approximately US$1 billion, which accounted for 55 percent of the agricultural imports bill and 3 percent of the overall import bill of the country.
Palm oil accounted for the lion’s share of the total imports (62 percent), followed by soya oil and sunflower oil (21 percent and 16 percent, respectively). There is a considerable increase in the share of soya oil and sunflower oil in the import basket. Palm oil is primarily sourced from Indonesia and Malaysia, soya oil from Argentina and Brazil, whereas Ukraine and Argentina are the major suppliers of sunflower oils to India.
High import shipments are a result of India’s high demand for edible oils. India’s per capita consumption of edible oils, which was 15.8 kg per person per annum in FY13, now stands at 19.7 kg. In order to reduce India’s dependence on imports for a highly demanded commodity, the government of India is now taking initiatives in order to become self-sufficient in terms of edible oils.
India has launched an ambitious National Edible Oil Mission-Oil Palm (NMEO-OP) to reduce dependence on imported edible oil from 55% to 40%. The target is to increase the area under oil palm cultivation from 3.7 lakh hectares to 10 lakh hectares and produce 11.2 lakh tonnes of crude palm oil from 2.72 lakh tonnes in FY21 by FY26 and 28 lakh tonnes by FY30.
References:
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- https://bit.ly/3ygwHjH
