Business News/ Industry / Agriculture/  Govt scraps import duty, agri cess on soya bean oil, sunflower oil imports under TRQ

The finance ministry has announced a waiver of basic customs duty and agriculture infrastructure and development cess on crude soya bean oil and sunflower seed oil imports under the tariff rate quota (TRQ) system. This waiver will be effective from 11 May to 30 June, 2023, and applies exclusively to importers holding a TRQ license for the 2022-23 fiscal year.

TRQ is a system allowing a specified volume of imports into India at a reduced or zero-duty rate, with normal tariffs applying to additional imports once the quota is reached. In May 2022, the government invited applications for a 2 million-tonne TRQ allocation for both the 2022-23 and 2023-24 fiscal years. However, due to a surge in sunflower oil and soya bean oil production, the TRQ allocation was withdrawn for FY 2023-24.

“To control the domestic prices and ensure farmers‘ interest amid a steep fall in prices globally the prices, it seems to be an encouraging move," said Ankur Gupta, practice leader, indirect tax at SW India, a tax advisory firm.

“However, to allow the importers to utilize the allocated TRQ, the Government has extended the timeline for the importers who have allocated TRQ for FY 2022-23 till Jun 30. Once the TRQs have been utilized, the exemption would be withdrawn, and the focus will be to utilize the domestic production and support the farmers who have excess production lying with them with remunerative prices for their crop," Gupta added. “Once the exemption is withdrawn, we might see a slight increase in the prices of these products as the customs duty could be in the range of 5% to 20%."

In March, the government decided to discontinue imports of crude sunflower seed oil under TRQ from 1 April this year and said no TRQs would be allocated for import of crude sunflower seed oil in 2023-24.

A similar decision was taken for crude soya bean oil in January this year. The duty-free import of 2 million tonnes (MT) per year was applicable earlier for 2022-23 and 2023-24 financial years for crude sunflower seed oil and crude soyoil. For crude sunflower oil, the TRQ was in place till 30 June this year.

Despite the order, the customs authority has reportedly not allowed to discharge the cargo arrived under the TRQ at zero duty since 1 April 2023. “This will now facilitate clearance of cargo presently lying at various ports under bond storage and the cargos which are under voyage," said B. V. Mehta, executive director of Solvent Extractors’ Association of India.

Puja Das
Puja Das is a New Delhi based policy reporter covering food, farm, fertiliser, water, and climate policies for Mint. Puja reports on farmers' distress and how the agriculture sector is impacting India's rural economy and policy initiatives to help meet the pledges made at COP27. Puja holds a post-graduation degree in Broadcast Journalism from the Indian Institute of Journalism & New Media, Bangalore.
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Updated: 11 May 2023, 03:37 PM IST
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