Cooking oil refiners want duty on imports to be raised further

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Govt can generate ₹7,000 cr more, says Solvent Extractors body

Mumbai, February 5:  

With cooking oil prices dropping six per cent December, when the Centre raised import duty on vegetable oils import, there is demand for raising the Customs levy further.

Led by the Solvent Extractors’ Association of India, oil millers have appealed to the Government to increase the import duty on cooking oils with the steady fall in international prices hurting the domestic industry.

Additional duty can help the Government generate a revenue of ₹6,500-7,000 crore. The duty on crude vegetable oil should be raised to 10 per cent from 7.5 per cent and on refined vegetable oil to 25 per cent from 15 per cent, said the Solvent Extractors’ Association in a statement.

The duty difference of 15 per cent between crude and refined vegetable oils will protect the margins of domestic refiners.

The hike in duty will not impact consumers as edible oil prices are at a five-year low and the future quotes for next six months show no sign of any surge in prices, it said.

Prices skid

Last December, the Government revised the duty structure but it has neither helped the farmers nor the oil mills as the duty difference between crude and refined oil was less than 15 per cent. Prices in the international markets have fallen by 6-8 per cent since the duty was revised.

Refined palm oil prices have dropped by eight per cent to $645 a tonne in January, while crude palm oil dipped seven per cent to $625 in the same period. Soyabean and sunflower oil prices have also come down by similar percentage points to $800 ($856) and $815 ($880), respectively.

Imports surge

Import of edible oils in the first two months (November and December) of oil year 2014-15 was up 15 per cent at 23.3 lakh tonnes against 20.1 lt in the same period last year. Shipments are expected to increase eight per cent to 125 lt this year against 116 lt valued at ₹60,000 crore last year.

Large edible oil imports were primarily due to lower prices in the international market and low import duty, said SEA.