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Govt mulling to increase import duty on refined edible oil

25 May 2012 Evaluate

The government is considering a proposal to increase import duty on refined edible oil in a bid to support the domestic industry. An increase in the duty on refined vegetable oil is expected to encourage the imports of crude vegetable oil and help domestic refiners.

India imports about 50% of its domestic requirements of edible oil. One of the main sources of the imports is Indonesia. However, the Indonesian government has recently hiked the export duty on both crude and processed refined palm oil. The increase in export duty on crude oil is however much more (18%) than on processed or refined oil (9%), leading to importers preferring imports of refined oil.

On the other hand, most Indian refineries are on the verge of closing as they are facing stiff competition from imports and production is also getting affected due to a fall in the production of oilseeds. Raising the import duty on refined oil will discourage imports of refined oil and help increase the imports of crude oil. It will also help the domestic industry, as suppliers will start depending on domestic refiners.

India imports palm oil from Indonesia and Malaysia and soybean oil from Brazil and Argentina. There is zero duty on crude edible oils and 7.5% on refined edible oils.

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