New Delhi: With inflation ruling in the negative zone, the industry expects the Centre to slap import duty on the edible oils in the Budget and says the government may garner revenue worth Rs5,000 crore a year with this move.
“The government had withdrawn import duty in April 2008 when there was high inflation. But now that inflation has turned negative, the situation is perfect for the duty to be reimposed.
“Moreover, the government can earn a whopping Rs5,000 crore from such move,” Mumbai-based Solvent Extractors’ Association (SEA) executive director B V Mehta told the agency.
The SEA has suggested imposing at least 20% duty on crude palm oil, 30% on RBD palmolein, 25% on crude soyabean oil and 20% on sunflower oil.
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At present, crude oils can be imported duty-free while refined oils attract 7.5%. But the association apprehends that the projection of a below-normal monsoon may delay the imposition of the duty. India is the largest importer of vegetable oils in the world after China.
“Increase in duty will send positive signals to farmers and will encourage them to expand area under oilseed cultivation during the current Kharif season,” the SEA said, adding the imposition of duty would not lead to a price rise.
The SEA has been demanding that the duty be re-imposed to protect the interest of domestic industry and farmers against the dumping of cheaper imported products.
Retail prices of widely-used edible oils are currently ruling in the range of Rs55-65 a litre, compared with that of Rs70-80 early last year when surging inflation became a major cause for concern.
India is expected to purchase 75 lakh tonnes from the overseas market in the 2008-09 oil year (November-October) against 56 lakh tonnes in the last year, according to the industry data.
The Central Organisation for Oil Industry and Trade has also warned that such high imports will make India heavily dependent on exporting countries, which can dictate their own terms and prices in future.
The country needs over 125 lakh tonnes of edible oils for its annual consumption and is mainly dependent on imports to cater for domestic supply.
Nevertheless, the SEA has suggested that the government should create an oilseeds and oil development fund by reimposing customs duty on edible oils.