The government may impose 5 per cent import duty on crude edible oil and hike custom duty on refined cooking oil to protect the interests of farmers and processing industry, sources said.
The proposal may come up before the Cabinet Committee on Economic Affairs (CCEA) this week, they added.
At present, there is zero duty on crude edible oil and 7.5 per cent on refined edible oils. India imports over 50 per cent of its domestic demand. In 2011-12 oil year, the country imported a record 10.19 million tonnes of vegetable oils.
Finance Minister P Chidambaram, Agriculture Minister Sharad Pawar and Food Minister K V Thomas today met to review edible oil imports into the country.
"I met Finance Minister and Agriculture Minister and briefed them about edible oil imports, wheat exports and OMSS," Thomas told reporters after the meeting here, but he declined to share further details.
Sources, however, said that there was an understanding in the meeting to increase the import duty on crude edible oil to protect palm oil growers in Andhra Pradesh.
The Agriculture Ministry wanted to hike import duty on crude oil to 7.5 per cent from zero per cent, while on refined oil, it sought to double the duty to 15 per cent. However, the Finance Ministry felt this would lead to rise in retail prices and food inflation.
"A middle path is likely to be adopted. A Cabinet note will be prepared by the Agriculture Ministry. The note may propose 5 per cent duty on crude edible oil," a source said.
Import duty on refined edible oils would also be hiked, but it would be lower than 15 per cent, sources said.
The government is considering to increase duty on edible oil to curb cheaper imports from Malaysia, sources said.
Besides edible oils, the meeting also discussed sale of wheat to bulk consumers such as flour millers and biscuit makers under OMSS.
The Food Ministry is preparing a proposal to cut wheat prices under the scheme to boost sales, sources said.
On wheat exports, the government may consider allowing further shipments from its stocks.
Already, the Centre has allowed 4.5 million tonnes of wheat from FCI godowns to clear surplus stock and ease storage crunch.