Import duty on edible oil raised to 10 per cent.

NEW DELHI: India, the world's leading buyer of edible oils, has increased the import duty on refined edible oil. On Thursday, the Cabinet Committee on Economic Affairs (CCEA) considered the proposal to raise duty to 10 per cent giving support to the domestic industry and farmers.

Leading edible oil manufacturers from Adani to Cargill, while welcoming the move, said it would not impact the retail prices of edible oil. "It is too meagre to have any impact on refiners or the edible sector," said BV Mehta, executive director of the Solvent Extractors Association.

The industry had been demanding an increase in the import duty on refined oil to 14.5 per cent thereby ensuring a marked difference between crude and refined edible oil.

Currently, the import duty on crude edible oil is 2.5 per cent and on refined edible oil is 7.5 per cent.

Owing to a bare 5 per cent gap in the duties, there has been an increase in the import of refined oils, leading to a fall in the capacity utilisation of domestic refiners.

"Refiners have become packers and seen a 30 per cent fall in their capacity utilisation," said Mehta. However, for consumers the 2.5 per cent increase on duty is unlikely to make an impact. "The 2.5 per cent increase in duty on $820 per tonne of refined palmolein works out to $20 a tonne.

This means an increase of Rs 1.50 per litre of oil. But in reality there will be no increase as we will not import refined oil," said Angshu Mallick, CEO Adani Wilmar, which markets the Fortune brand.

Mallick said prices of refined palmolein oil would remain stable at Rs 60-65 a litre and soyabean oil in the range of Rs 75-80 a litre.

Domestic edible oil consumption was pegged at 17-18 million tonne with imports accounting close to 10 million tonne. Indonesia and Malaysia were the key exporting countries with palm oil accounting for nearly 80 per cent of oil imports. "It will help move the needle from refining in Indonesia to back in India," said Siraj Chaudhary, managing director, Cargill India. According to him, there was unlikely to be any impact on domestic prices of edible oil.

"There is enough oil in domestic and global markets. We might even see prices in Indonesia correcting as a reaction to the hike in duty by India," he said. According to industry sources, palmolein units which were using 15-20 per cent of their capacities might increase their utilisation to 40-50 per cent.

Source : economictimes.indiatimes.com