Price Of Edible Oil Will Now Reduce As Govt Plans To Cut Taxes: Check Full Details
India is going to cut taxes on some edible oils in order to offset the impact on the domestic market after the war in Ukraine and Indonesia’s ban on palm oil exports sent prices soaring.
What Is This Cess?
India, the world’s top importer of vegetable oils, will reduce the agriculture infrastructure and development cess on crude palm oil imports from 5%.
The new tax amount is still being deliberated.
This cess is imposed on top of basic tax rates on certain items.
It is then used to fund agriculture infrastructure projects.
The base import duty on crude palm oil has already been scrapped.
Soaring vegetable oil prices is a major concern since it relies on imports for 60% of its needs.
Prices have been rising for the past two years but have surged in the wake of Russia’s invasion of Ukraine which exported sunflower oil.
However, a major factor in the price rise has been Indonesia which is the biggest shipper of edible oils and imposed a ban on palm oil exports to protect its domestic market.
Why It Didn’t Work Before
India has attempted cuts in import duties on palm, soybean oil and sunflower oil in the past in order to keep the prices in check.
It also limited inventories to prevent hoarding.
However, it did not yield much success since the measures stoked expectations of higher purchases, which further boosted international prices.
This time around the government will cut import duties on crude varieties of canola oil, olive oil, rice bran oil and palm kernel oil to 5% from 35% to help boost domestic supply.