The vegetable oil industry has demanded the restoration of earlier duty structure for imports of palm oil. They have cautioned that any move for further cut in import duty for vegetable oils would spell a doom for growers as prices of oilseeds have started declining. The industry has demanded that the import duty on refined palm oil be restored back to 90% and that on crude palm oil to 80%.
Keeping in view the expected rise in demand during the festive seasons of Dussera and Diwali, the government in August 2006 effected a 10% cut in import duty. Accordingly, the import duty on refined palm oil was reduced from 90% to 80% and that on crude palm oil was reduced from 80% to 70%. This duty cut was initially for the period till the end of October, 2006 which was later extended to December 31, 2006.
The government is very much concerned over the rising prices of essential commodities. In the past few weeks, the inflation rate based on the point to point movement of wholesale price index had crossed 5.5%. Hence the government is hesitant of restoring the earlier duty structure on imported vegetable oils. The Central Organisation for Oil Industry and Trade (COOIT) have cautioned that unless the earlier import duty structure is not restored, the growers will not be saved from making distress sales.
COOIT chairman, Davish Jain in his representation to Union finance minister, P Chidambaram and agriculture minister, Sharad Pawar said, ?We are writing this to express our grave concern about the strong rumours in the market that the government is actively considering to further reduce the customs duty on palm oil. The khariff oilseed crushing season is in full swing and any cut in duty at this time will greatly harm the farmers, who will get even lower prices for their produce, if the imported oil is made cheaper.?
Jain also cautioned that as khariff (summer) oilseed production estimates this year have shown a decline cheaper imports would flow in and depress domestic prices of oilseeds. Vegetable oil prices in the international markets are also on the decline, which has a direct bearing on domestic prices for oilseeds and oil.
The market intervention agency Nafed has reduced the prices of mustard/rapeseed being sold by them, because of the fall in world oil prices. Duty cut will only mean a further fall in oilseed prices, said Jain.