Govt. Reduces Import Duty on Refined Soybean Oil and Sunflower Oil: Impact on Domestic Prices and Supply

The Government of India has recently reduced the basic import duty on refined soybean oil and sunflower oil from 17.5 percent to 12.5 percent, effective from June 15. This decision aims to mitigate the rising local prices of edible oils and ensure an adequate supply for consumers, according to a government release.

The reduction in import duty is expected to have a positive impact on domestic retail prices, as it directly affects the landed cost of edible oils. By lowering the duty on refined soybean oil and sunflower oil, the government aims to ease the burden on consumers and stabilize prices in the market.

This is not the first time import duties on these oils have been reduced. In October 2021, the import duty was lowered from 32.5 percent to 17.5 percent due to high international prices. The current reduction reflects the government’s ongoing efforts to address price fluctuations and maintain affordability for consumers.

However, industry experts believe that the impact on the market may be temporary and unlikely to lead to a surge in imports. The reduced duty difference between crude and refined soybean oil and sunflower oil may not make importing refined oils commercially viable. While the move could influence market sentiment temporarily, it is not expected to significantly alter the import landscape, according to B V Mehta, Executive Director of the Solvent Extractors’ Association of India (SEA).

Additionally, the delayed onset of monsoon in Kerala, which caused a one-week delay in sowing, has raised concerns about the upcoming oil year (2023-24) and the availability of vegetable oils. Although the Meteorological Department has predicted a near-normal monsoon, the possibility of El Nino could impact the monsoon season and subsequently affect the kharif crop and domestic oil supply.

India heavily relies on imports, which account for 60 percent of its edible oil consumption. Major sources of imports include Argentina, Brazil, Ukraine, and Russia. The reduction in import duty on refined soybean oil and sunflower oil is expected to contribute to a more stable market and benefit consumers in the country.

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