The Union government on Tuesday reduced basic customs duty on crude palm oil to 10%, which will help bring down the edible oil prices in the retail market. The Central Board of Indirect Taxes and Customs (CBIC) in a notification cut the basic customs duty on crude palm oil to 10% and refined palm oil to 37.5% with effect from Wednesday.
The effective duty, which includes cess and other charges, on crude palm oil will be 30.25%, while for refined palm oil it would be 41.25% from Wednesday. This notification shall come into effect on 30th June 2021 and will remain in force up to and inclusive of the 30th September 2021," the CBIC said.
Currently, basic customs duty on crude palm oil is 15%, while it is 45% for all other categories of palmolein (RBD Palm Oil, RBD Palmolein, RBD Palm Stearin and any Palm Oil other than Crude Palm Oil).
To give relief to people, the Government has reduced customs duty on crude palm oil from 35.75% to 30.25% and refined palm oil from 49.5% to 41.25%. This will bring down the retail prices of edible oils in the market, the CBIC tweeted.
Solvent Extractors Association of India (SEA) Executive Director BV Mehta said, "The government has tried to balance the interest of both consumers and farmers. It will give immediate relief to the poor, while farmers will be protected as duty will be again increased from October when the harvesting season begins.
The reduction in import duty of refined palm oil will not have much impact, as the inward shipments are restricted, he added. Domestic edible oil prices have more than doubled in the past year. India meets about two-thirds of its edible oil demand through imports. As per data by industry body SEA, India's import of palm oils rose by 48% to 7,69,602 tonne in May 2021 on higher shipments of crude palm oil.
India, the world's leading vegetable oil buyer, had imported 4,00,506 tonne palm oils in May 2020. The country's total vegetable oil imports rose by 68% to Rs 12.49 lakh tonne in May 2021, compared to 7.43 lakh tonne in the year-ago period. The share of palm oil is more than 60% of the country's total vegetable oil imports.
Earlier this month, the government had reduced the tariff value for the import of edible oil, including palm oil, by up to $112 per tonne, a move which experts had said would help lower domestic prices.
Tax experts had said that the reduction in tariff value could result in softening of edible oil prices in the domestic markets as customs duty payable on-base import price would also come down.