The proposition to cut the import duty on edible oils-delayed.
India has postponed a proposition to reduce the import duty on edible oils as cooking oil prices began to reduce in the world market after hitting record highs. The world’s biggest vegetable oil importer was planning to cut duties after domestic soy oil and palm oil prices more than doubled in 2020, hitting consumers already affected by high fuel prices and reduced incomes because of the COVID-19 pandemic.
The government is not planning to cut import duties presently as it is not a sustainable solution; instead, they are looking for a long term solution. The decision was taken to do so because the prices of edible oils overseas reduced, resulting in price reduction domestically. A close eye will be kept on the overseas market, and if needed, the proposition to cut import tariffs will be revived to protect the interests of the farmers and consumers.
In spite of more than a 20% price correction recently, Indian edible oil prices were still around were two times their levels last year. Therefore, household utilization is expected to decline if the prices continue to remain elevated. According to dealers, bulk demands from hotels, restaurants, bakeries have already reduced because of lockdown instilled due to the second wave of the Covid-19 pandemic.
Palm oil is purchased from Indonesia and Malaysia, and soy oil and sunflower oil from Argentina, Brazil, Ukraine and Russia, by India. Aside from reducing government revenues, any cuts in import duty could allow overseas suppliers to increase prices, something the palm oil exporters have done previously, and it should not be repeated.
The government deduct the reliance on high-priced imports. Farmers have already started the soybean and groundnut farming process; cutting import prices now would serve as a wrong signal to farmers.