Home Finance Government considering reduction in edible oil import tax, says report

Government considering reduction in edible oil import tax, says report

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In a bid to reduce food costs in the world’s biggest vegetable oil importer, two government and two industry officials told Reuters that India is likely to reduce import taxes on edible oils after cooking oil prices hit record highs last month. is considering.

While no decision has been made, the tax reduction could reduce local prices and boost consumption, with prices of soy and sunflower oil supporting Malaysian palm oil, and local oilseeds such as rapeseed, soybean. And peanut prices have plummeted.

A government official with knowledge of the matter said on Wednesday, “The proposal to reduce the import duty on edible oils is being reviewed.”

The government will take a final decision on cutting taxes sometime this month, said a consumer affairs ministry official involved in the process, who asked to remain anonymous.

Domestic soy oil and palm oil prices have more than doubled in the past year, leaving consumers with already record fuel prices and loss of income amid the COVID-19 pandemic.

India meets about two-thirds of its Demand through imports, palm oil imports are taxed at 32.5%, while crude soybeans and soya oil are taxed at 35%.

It buys palm oil from Indonesia and Malaysia, and soy oil and sunflower oil from Argentina, Brazil, Ukraine and Russia.

“There are different views on this. One idea is to first monitor the sowing of kharif (summer sown) oilseeds and see how it flourishes,” the first official said.

“The second approach is to evaluate the impact of lowering tariffs,” he said, noting that it needs to be weighed against the risk of suppliers raising prices.

However, some in the industry are opposing the cut in import duty as it may only help foreign suppliers and discourage farmers from expanding oilseeds, the consumer affairs official said.

“Revenue is not an issue. The government’s tax collection will remain the same as last year as prices have gone up in the global market,” the official said.

According to data from Solvent Extractors Association of India (SEA), a trade body, the average price of crude palm oil at Indian ports was $1,173 a tonne in April 2021, up from $599 a year ago.

During a meeting with government officials last week on reducing SEA suggests using taxes to subsidize sales to consumers, said group head BV Mehta.

“The government can help poor people even without cutting import tax by providing subsidized edible oil,” Mehta said.

(Reporting by Rajendra Jadhav and Mayank Bhardwaj; Editing by Christian Schmollinger)

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