20/03/2008 (The Hindu Business Line), New Delhi - The Centre on Thursday slashed import duties on all crude and refined edible oils as part of its attempt to cushion the impact of increase in the global vegetable oil prices. It also decided to exempt semi-milled and wholly milled rice from import duty and specified that this exemption would be available up to March 31 next year.
While the import duty on refined edible oils has come down across the board to 27.5 per cent, the duty has been reduced to 20 per cent for all crude oils.
Specifically, the import duty on crude palm oil including crude palmolein has been slashed from 45 per cent to 20 per cent. On the other hand, import duty on refined palm oil including RBD palmolein has been brought down from 52.5 per cent to 27.5 per cent.
While import duty on crude mustard/rapeseed/colza/canola oils have come down from 75 per cent to 20 per cent, the import duty on refined mustard/ rapeseed/ colza/ canola oils has been slashed from 75 per cent to 27.5 per cent.
For crude sunflower oil, the import duty has been halved to 20 per cent from 40 per cent. The import duty on refined sunflower oil has been cut from 50 per cent to 27.5 per cent.
An official release also said the tariff values of crude palm oil ($447 a tonne ), RBD palm oil ($476 a tonne), crude palmolein ($481 a tonne), and RBD palmolein ($484 a tonne) have been frozen at July 2006 prices.
The release said owing to a surge in demand, international prices of edible oils had continued to exhibit a sharp and steady upward trend in recent months. For instance, the international price of crude palm oil (f.o.b Malaysia) has increased from $770 a tonne in the last week of August 2007 to about $1220 a tonne in the last week of February 2008. During the same period, the international price of sunflower oil (c.i.f. Rotterdam) has increased from $947 to $1695 a tonne – an increase of about 79 per cent .
An increase of this order has obviously put pressure on domestic prices of edible oils despite two rounds of reductions in customs duties on palm oil in April, 2007 (by 10 percentage points) and again in July, 2007(by 5 percentage points). Wholesale prices of RBD palmolein (Mumbai) have increased from Rs 4,500 per quintal in August 2007 to Rs 5,820 per quintal in February 2008, the release said.
Over the same period, price of sunflower oil (Mumbai) has increased from Rs 4,900 a quintal to Rs 8250 a quintal and of mustard oil (Delhi) from Rs 4,960 per quintal to Rs 6,330 a quintal.
Rumours had been agog since the beginning of this week on the duty cut and domestic prices have been reacting to the possible move of the Centre. However, the reduction in duty comes after prices have begun to cool and, in fact, declined to pre-budget levels. On Tuesday, as another measure to curb inflation, the Centre had banned export of all edible oils.
The move also comes at a time when the arrival of rabi oilseeds crop is due. Rabi oilseeds crop is seen down on lower coverage of crops such as mustard and sunflower. The futures market also reacted sharply on Thursday with soyabean and rapeseed/mustard oils counter witnessing the prices hitting the lower circuit.