Duty Cut on Skimmed Milk Powder on Cards to Cool Prices.

The government plans to import skimmed milk powder and butter oil at concessional duties to cool rising prices of dairy products. Milk prices in December were higher by 17.75% from a year ago after having risen more than 20% the year before. Skimmed milk powder attracts 60% import duty. The government could also look at removing the duty completely on import of a certain quantity of skimmed milk powder, as reported in The Economic Times.

India, the world’s biggest milk producer, had allowed import of up to 30,000 tonnes of skimmed milk powder last year at 5% customs duty. It had also permitted duty free import of 15,000 tonnes of anhydrous butter oil imports. Import of the product normally attracts 30% duty.

The government of India has asked the National Dairy Development Board (NDDB) for a report on the situation. A committee of secretaries will take a final decision after NDDB gives its inputs. Food inflation has surged to a 10-week high of 14.44% for the week ended December 18 on higher prices of vegetables, milk, fruits, cereals and protein-based products. As on December 18, milk prices have risen 17.75% from a year ago. The 52-week average inflation has been higher at nearly 25%.

India produces about 105-110 million tones of milk every year, roughly of the same order as the domestic demand. The tight demand-supply situation has made milk more prone to fluctuations. Of the total milk produced, about 50% is consumed by households, while the remaining 50% is considered marketable surplus. The organized sector accounts for about 30% of the marketable surplus.

Most of the dairy cooperatives build their quota of milk powder in winter, when the supply of milk is good. With procurement prices going up prices in summer, the lean season, could further rise and the government wants to prevent such a situation.

Source : fnbnews.com