New Delhi, Sept. 15 (PTI): The government is expected to raise the import duty on refined edible oil to 10 per cent from 7.5 per cent.
A cabinet note has been circulated by the food ministry, sources said.
The move is aimed to protect domestic players in the refined oil business, the sources added.
At present, the cost of imported refined oil is lower than that of crude edible oil because of the inverted duty structure adopted by exporting countries such as Indonesia and Malaysia. These countries give export duty benefits to finished products.
An inverted duty structure affects the domestic industry adversely as it has to pay a higher price for the raw material in terms of duty, while the finished product costs less.
The import duty on crude edible oil is about 2.5 per cent and 7.5 per cent on refined oil.
“The food ministry has circulated a note for the consideration of the Cabinet Committee on Economic Affairs. Increase in import duty on refined oil is always good for domestic players who import crude oil,” a source in the commerce ministry said.
Due to such inverted duty structure, local traders favour the import of refined edible oil rather than crude oil, the source said.
India, the world’s second largest cooking oil importer, purchased 2.78 million tonnes of edible oil from the global market between November 2012 and January this year.
Industry body Solvent Extractors Association has been demanding a hike in the import duty on refined oil to 12.5 per cent to curb imports and protect domestic refineries.
In January this year, the government imposed a duty of 2.5 per cent on crude oil from zero duty.
According to reports, the share of crude oil in the overall vegetable oil imports of the country has declined to 58 per cent from 84 per cent during the last two months.
At present, domestic edible oil crushing and refining units are operating at 30-35 per cent capacity against about 50 per cent a year ago.