Recommendations of Expert Technical Group on import tariffs

Source: Ask Raymond Jame
22 January 2000

In accordance with an expert technical group, the Indian government approved the phased deregulation of the oil sector from 1 April 1998. The expert technical group's recommendations are classified in three phases - the beginning of the deregulation period (which included changes at the time of announcement of the policy), the transition period (1 April 1998 to 31 March 2002), and the end of transition period (31 March 2002). The recommendations covered tariff levels.

Recommendations at the beginning of the deregulation period

allow import parity pricing to refining activity
free bulk products (naphtha, FO, LSHS, bitumen) from all pricing and distribution controls
retail products such as kerosene, petrol, diesel, LPG and ATF to continue under pricing and distribution controls at the retail level; however, the refining activity would receive import parity pricing even for retail products

Recommendations during transition period

reduce subsidies on kerosene and LPG every year
rationalise the import tariff structure every year so as to create protection for new refineries

Recommendations at the end of transition period

complete deregulation of the sector with all pricing and distribution controls removed; allow market forces to determine pricing at the retail level.

Pricing and distribution controls have been abolished on bulk products, such as naphtha, LSHS, furnace oil, and bitumen. From March 1998, refineries charge a common consumer price for bulk products based on import parity. Two sets of prices are announced - prices ex-port, and prices inland - for refineries. The final pricing is arrived at after mutual consultations among the refineries.

Recommendations of Expert Technical Group on import tariffs