Kitchen Costs Drop! Govt Halves Import Duty on Edible Oils

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India has reduced its standard import tax on crude edible oils to 10%, seeking to rein in inflation and help local refineries. The change, since May 31, will reduce retail prices and increase demand.

Major Developments of the Policy Change

The duty on crude palm, soybean, and sunflower oils has been brought down from 20% to 10%, reducing the effective tax to 16.5% from 27.5%.

The excise on refined edible oils is not altered at 35.75%, increasing the difference between crude and refined oil imports to 19.25%.

The move will be helpful for refiners as it will dissuade the import of refined oils and give a boost to domestic processing.

Impact on Consumers and Industry

Retail prices of cooking oils, which had gone up by about 30% over the last year, are likely to reduce in the coming weeks.

The policy change is expected to tighten India's refining industry, enhancing capacity utilization and margins.

Industry captains see edible oil prices falling by 5-6% at the retail level, while wholesale markets also reflect a weakening trend.

Market Reactions and Future Outlook

The Indian Vegetable Oil Producers' Association hailed the decision, highlighting advantage for domestic refiners and consumers.

A few industry associations, however, said that the duty reduction would put domestic oilseed farmers at a disadvantage.

The government anticipates food inflation will slow down further, bolstered by good monsoon rains.

Sources: Business Standard, India Today, The Star, Rediff Money, Live Mint.