Government hikes import duty on crude & refined edible oil by 5 per cent

New Delhi: The government has hiked import duty on both crude and refined edible oil by 5 per cent to protect the interest of domestic farmers and oil processors amid fall in global prices, a move that may lead to rise in retail prices.

The customs duty on crude oil has been increased to 7.5 per cent from 2.5 per cent earlier, while the duty on refined edible oil has been raised to 15 per cent from 10 per cent, as per the notification issued by the Central Board of Excise and Customs (CBEC).

India's vegetable oil imports rose 12 per cent to an all time high of 11.82 million tonnes in the 2013-14 marketing year ended October, on rise in domestic consumption and low rates of cooking oils in global markets.

The country imports about 60 per cent of the annual domestic demand of vegetable oils (comprising edible and non-edible oils) of about 19 million tonnes. Agriculture Ministry had proposed increase in import duty of refined edible oil to 12.5 per cent from the existing 10 per cent, while the Food Ministry had recommended that the hike should be to 15 per cent.

On crude edible oil, both the ministries recommended that import duty be increased to 5 per cent from the current 2.5 per cent. In October, Food Minister Ram Vilas Paswan had met Finance Minister Arun Jaitley to discuss the issue of raising import duty on crude and refined edible oils to restrict cheap imports. Industry body Solvent Extractors' Association has been demanding an increase in the import duty on crude and refined edible oils at 10 per cent and 25 per cent, respectively, in order to protect the domestic oilseeds processors.

Meanwhile, welcoming the government's decision, Solvent Extractors' Association Executive Director B V Mehta said: "It would have been better for the domestic processors if the duty difference between the crude and refined edible oils was kept at 10-12 per cent as it would have resulted in capacity utilisation and value addition by the domestic refiners. Mehta forecast the prices to increase marginally following this duty hike. Echoing the similar views, Indian Vanaspati Producers Association Secretary General S P Kamrah said:"Something has been done but there was need to do more. The government should consider keeping the duty difference between crude and edible cooking oil at 10 per cent”.