The Union government, in a key policy move to tame inflation, has abolished basic customs duty on crude and unrefined imports of three edible oils, whose prices remain globally high, until March 2022, while the basic customs duty on refined varieties has been cut to 17.5% from 32.5%.
This is the fifth reduction in import tariffs on vegetable oils since February, a basic ingredient of cooking that has inflated household budgets since India imports up to two-thirds of its domestic consumption requirements for edible oils.
The duty cuts will immediately lower prices and potentially stave food inflation soaring to multi-year highs because of costlier imports. According to a central notification, imported crude palm oil, the most widely consumed of edible oils in the Indian market, will now be charged an agri infrastructure cess of 7.5%, while unrefined soyabean and sunflower oils will attract a cess of 5 %, down from 20%.
The lowering of the cess will bring down the effective customs duty on palm, soyabean and sunflower oils 8.5%, 5.5% and 5.5% respectively, according to the government’s notification.
The reductions will cut prices by up to ₹20,000 a tonne, which is expected to have a pass-through effect on final consumer prices. India imports up to two-thirds of its edible-oil requirement to meet domestic demand.