To alleviate the burden of rising inflation on the common public, the central government has taken a significant step. The government has reduced the import duty on edible oils like crude sunflower, soybean, and palm oil from 20% to 10%.
New Delhi: Providing significant relief to the common public on the inflation front, the central government has reduced the Basic Custom Duty on imported crude edible oils from 20% to 10%. This decision comes at a time when edible oil prices in the retail market remained consistently high, and food inflation was impacting the daily lives of citizens.
Who will the new duty apply to?
Under this government decision, the 20% import duty on crude sunflower oil, soybean oil, and palm oil has been reduced to 10%. Following this change, the difference in import duty between crude and refined edible oils has increased from 8.75% to 19.25%, which is considered a significant relief for the domestic refining industry.
Inflation Relief Strategy
According to the Ministry of Food and Public Distribution, the main objective of this decision is to provide relief to consumers from high edible oil prices and to encourage domestic refining. In recent years, edible oil prices have seen an unexpected surge, increasing the burden on consumers and leading to a continuous rise in food inflation rates.
Instructions to the Industry: Immediate Price Reduction
The government hasn't just reduced the duty; it has also issued clear instructions to edible oil industry associations to immediately pass on the benefits of this duty reduction to consumers. A crucial meeting was held with leading industry organizations and traders chaired by the Secretary of the Ministry of Food. All stakeholders were instructed to ensure that the reduced cost reaches the end consumer through the supply chain.
Weekly MRP Sheet Sharing Required
The government has instructed edible oil companies to share updated information on the Maximum Retail Price (MRP) of their branded products with the ministry every week. Furthermore, the government has provided companies with a specific format for reporting Price to Distributor (PTD) and MRP data to maintain transparency and ensure that the price reduction benefits are genuinely passed on to customers.
Boost for the Domestic Refining Industry
The new decision is also likely to benefit the domestic refining industry. Now, with lower import duty on crude edible oils and significantly higher duty on refined oils, companies refining oil domestically will receive an incentive. This will not only boost the domestic industry but also reduce the need to import refined oil from abroad.
Why was this decision taken?
After reviewing edible oil prices and applicable import duties over the past year, the government realized that a reduction in import duty was necessary to provide maximum benefit to the consumer. It was observed on several occasions that despite a decrease in global crude oil prices, this benefit was not reaching Indian consumers due to high import duties and a lengthy supply chain, preventing cost reduction.
The government expects this decision to result in an 8-10% reduction in retail edible oil prices. However, this will entirely depend on the companies' honest adherence to government instructions.
Expert Opinions
Experts in finance and consumer affairs have applauded the government's move. They believe this decision is timely and could have far-reaching positive effects. They also suggested that the government should take strict action if companies act negligently in this regard.
Consumer rights activist Sunil Kumar stated, "This decision is welcome, but it's also essential that retailers and distributors also implement the MRP reduction."
What's Next?
The government has clarified that this is not a one-time relief measure but part of a long-term price control strategy. The ministry will continue to monitor food product prices in the coming period and may implement further relief measures if necessary.
