Dynamic import tariffs for edible oils mooted
The Commission for Agricultural Costs and Prices (CACP) has recommended a “dynamic import duty structure” for edible oils to counter surging imports and falling domestic oilseed prices. This tariff system would be based on MSP, and domestic and global prices. India, importing 60% of its edible oil, saw a 17% rise to 16.47 million tonnes last year, impacting local prices. The CACP also advocates extending the national mission on edible oils and improving pulse procurement amidst rising import dependence.
To curb the surge in import of edible oils, which has adversely impacted domestic oilseed prices, the Commission for Agricultural Costs and Prices (CACP) in the agriculture ministry has recommended a “dynamic import duty structure” for these farm goods. The proposed tariff system will be based on minimum support price (MSP) for oilseeds as well as domestic and global prices.
“In addition, the duty differential between crude and refined oils should be kept at 10%-15%,” CACP in the price policy report for kharif crops marketing season (2024-25) has stated.
Currently, crude palm, soybean and sunflower oil imports attract only a 5% agri infra cess and a 10% education cess, resulting in a total tax incidence of 5.5%. To bring down prices last year, the government had reduced the import duty on refined soybean and sunflower oils to 13.75% from 17.5%. The Solvent Extractors Association of India (SEA) has urged the government to increase gap between import duty of crude and refined edible oil to at least 13% from current level of 8.25% for protecting domestic processing industry.
“With continuance of lower duty structure, India has become a dumping ground for cheap edible oil which would hurt farmers as well as processors,” BV Mehta, executive director, SEA had earlier said. India imports about 60% of its annual consumption of around 24 to 25 MT edible oils mostly from Indonesia, Malaysia, Ukraine and Argentia.
India’s import of edible oils – palm, soybean and sunflower – rose 17% on year to a record 16.47 million tonne (MT) in the 2022-23 oil year (October-Septemebr), helped by lower import tariffs. Because of record imports, the domestic prices of edible oil varieties such as mustard and soybean have been impacted.
To reduce import dependence, the Commission, which recommends MSP for 23 odd crops, has suggested extending the national mission on edible oils to major oilseeds such as mustard, soybean, sunflower, groundnut, etc. and ensure higher participation of the private sector in procurement operations of oilseeds.
The commission has noted that despite an increase in pulse output, the country’s import dependence on masoor, tur and urad has been high. “Concerted efforts should be made for area expansion and yield improvement, and procurement of pulses should be strengthened,” the commission noted.
According to CACP, Maharashtra, Karnataka and Uttar Pradesh account for more than two-third of the total tur production and 25 districts contribute 60% of the output of pulses varieties. India imports about 15% of its pulses consumption.
The CACP has stated that ‘unsustainable and uneconomical’ practice of offering bonus over and above the MSP for paddy procurement by the State Governments creates distortions in the market. “This restrains private trade participation and potentially discourages competition, which, otherwise could be advantageous for farmers,” the commission observed.
Chhattisgarh last season announced purchase of paddy at Rs 3,100/quintal against the MSP of Rs 2,183/quintal for the current marketing season (October-September). The BJP in its manifesto for Odisha as in case of Chhattisgarh, promised to buy paddy at Rs 3,100/quintal while the government recently announced MSP for paddy at Rs 2300/quintal for 2024-25 season.
Typically, when a bonus over MSP is offered for a crop, the farmers tend to grow that in more areas, leading to surplus output
Source Link : https://www.financialexpress.com/policy/economy-dynamic-import-tariffs-for-edible-oils-mooted-3532657/
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