Govt cuts basic customs duty on edible oils as domestic prices zoom

13 Sep 2021

The government has further reduced the standard rate of customs duty on imported edible oils in order to ensure availability of edible oil to consumers at fair prices amidst a skyrocketing of edible oil prices in the country. This will involve a duty loss of around Rs4.600 crore to the government while the benefit of lower prices is expected to be passed on to the consumers, says a government release.

Accordingly, the customs duty on crude palm oil, crude soyabean oil and crude sunflower oil stands reduced to 2.5 per cent with effect from 11 September and the standard rate of duty on refined palm oils, refined soyabean oil and refined sunflower oil stands reduced to 32.5 per cent with effect from 11 September 2021.
However, the government notification in this regard also announced a hike in the Agri-cess on crude palm oil from 17.5 per cent to 20 per cent.
It may be noted that the international prices and thereby domestic prices of edible oils have been ruling high during 2021-22, which is a cause of serious concern from inflation as well as consumer’s point of view. Import duty on edible oils is one of the important factors that impacted landed cost of edible oils and thereby domestic prices.
In order to mitigate the rise in these prices, the government said, it had taken a series of steps since February 2021, including rationalisation of import duty.
In June the government had issued a notification reducing the standard rate of duty on crude palm oil to 10 per cent up to 30 September 2021. T had also amended the import policy of refined palm oils from “restricted” to “free” with immediate effect and for a period of up to 31 December 2021.
Further, import of refined palm oil is not permitted through any port in Kerala.
Through another notification, the government had, on 19 August, reduced the standard rate of duty on crude soyabean oil and crude sunflower oil to 7.5 per cent and on refined soyabean oil and sunflower oil to 37.5 per cent with effect from 20 August. It has been done through the amendments in a finance ministry notification.
The government has also taken various facilitation measures at various ports by customs, FSSAI, PP&Q, DFPD and DoCA. However, import of consignments of edible oils got delayed due to Wuhan virus pandemic. 
Also, a committee has been in place comprising of Food Safety & Standards Authority of India (FSSAI), Plant Quarantine of the Department of Agriculture, Cooperation & Farmers Welfare, Department of Food and Public Distribution, Department of Consumer Affairs and Customs which reviews the consignments of imported edible oils on weekly basis and also apprises the Inter-Ministerial Committee on Agricultural Commodities chaired by Secretary (Food).
The standard operating procedure for faster clearance of consignments of imported edible oils have been prepared. The average dwell time for clearances of consignments has come down to 3-4 days in case of edible oils.
The duty cuts already made amount to an estimated Rs3,500 crore in a full year. While the current/latest reduction in import duty will involve revenue losses to the tune of Rs1,100 crore in a full year, total direct value of benefits totalling Rs4600 crore is expected to be passed on to the consumers, in terms of duties given up by government.