Import duty relief for edible oils extended till March 2025
By Mukesh Jagota, Sandip Das
The government on Tuesday announced 50% export duty on molasses to ensure its adequate availability for local ethanol producers and extended the validity of lower import duties on edible oils by another year.
The existing concessional import duty on crude and refined edible oils – palm, soyabean, and sunflower – has been extended for one more year till March 31, 2025 well in advance to clamp down on any inflationary pressures in the key commodity just before the country heads into general elections. The lower duties on edible oils were earlier valid till March 31, 2024, will now continue till March 2025, a notification from the finance ministry stated.
To provide relief to consumers, the government in June last year had reduced the import duty on refined soybean and sunflower oils to 12.5% from 17.5%. The duties on crude palm, soybean and sunflower remains zero; these attract only a 5% agri infra cess and a 10% education cess, resulting in a total tax incidence of 5.5%.
The inflation of oils and fats subgroup within the Consumer Price Index came in at (-)14.96% in December as against (-)15.03% in November. The subgroup has remained in the deflationary zone since February 2023, due to supportive base effects and sharp decline in global edible oil prices this year.
India is hugely dependent on edible oil imports which meets 58% of the consumption demand of about 24-25 MT. In terms of share in domestic output, the share of oils includes mustard (40%), soybean (24%) and groundnut (7%) among others.
The imports have been growing each year. India’s import of edible oils – palm, soybean and sunflower – rose 17% on year to a record 16.47 million tonne (MT) in the 2022-23 oil year (November-October), helped by lower import tariffs, according to the trade body .
The volume of imports of these cooking oils had seen a peak of 15.1 MT in 2016-17. Due to large import of edible oil, the retail inflation in oil and fat category had been in the negative zone since February, 2023 as global prices softened. Inflation in cooking oil declined by 14.96% in December, 2023 on year.
The Solvent Extractors Association of India (SEA) had earlier stated that with continuance of lower duty structure, India would be dumping ground for cheap edible oil which would hurt farmers as well as processors
While supporting the moved to impose export duty on molasse, M Prabhakar Rao, President, Indian Sugar & Bio-energy Manufacturers Association (ISMA) said, “we had requested the government to completely stop the export of molasses with immediate effect as that will add to the country’s ethanol production, thereby reducing dependence on other feed stocks to some extent,”
According to ISMA, 1.5-1.6 MT of molasses is exported, which accounts for almost 10% of the total quantity of molasses produced. In ethanol terms, this molasses is worth around 380 million litres of ethanol.
The country’s sugar production after diverting for ethanol in the 2023-24 season (October-September) is estimated to be around 29 MT, a decline from 33 MT last year. The government has already banned sugar exports for the current season. Industry sources said that there has been improvement in recovery and output in the current season is likely to be around 31 MT.
This article has been republished from The Financial Express.