The total edible oil imports account for nearly Rs 10,800 crores per year. This is causing serious concern in the policy-making area. In order to protect the interest of the farmers, the Rajasthan chief minister Ashok Gehlot has urged the Prime Minister to raise the import duty on edible oil by 100 per cent from the existing levels. In a letter to the Prime Minister, he has said that if the prices continue to fall even after the revision then the duty should be further increased to maintain a reasonable return to farmers.

He has also requested to curb the import of excessive and unrestricted edible oils, which has crashed the prices of soyabean, rapeseed, mustard oil in Rajasthan and is affecting the welfare of the farmers. The competitiveness of the price of the palm oil is holding in spite of numerous efforts by the policy-making circles. The main reason for this cheaper palm oil is the falling prices all over the world and in the chief exporting countries viz, Malaysia and Indonesia. Malaysia and Indonesia are reducing or removing the export tax on their palm oil exports.

This policy initiative by the foreign Governments in making their exports competitive may hamper the recent initiative by the Indian Government to control the rise in imports.In this scenario, close look on the effect of the previous hike in import duty and the export policy of the foreign Governments reveals interesting results. An observation of the prices before and after hike of the palm oil in India reveals that, the prices fell instead of rising after the hike in December last year (for a close look on the price trend refer table.) There has been a decline in prices after the hike in import duty. The prices in the domestic front are affected by the falling prices in the world market. World edible oil prices have been falling due to increased production. For example the palm oil futures at COMMEX has fallen by 9.81 per cent after the duty hike.

The fall in imported palm oil price in India is around 6.51 per cent. This fall in prices can be attributed to the reduction in prices of palm oil by Malaysian exporters. Indonesia is planning to slash the export tax on crude palm oil from 10 per cent to 5 per cent and remove the 6 per cent export tax on palmolein in earlier Sept. In line with this Malaysia is also planning to remove the export tax on crude palm oil. According to Malaysian primary industries minister, Lim Keng Yaik, eight companies will be allowed to export 500,000 tonnes of duty-free crude palm oil.