The government has reduced the import tax on crude edible oil by 10%. This means that importing oil from abroad will now be subject to a lower tax rate, signaling a positive change. This reduction is expected to benefit the domestic oil production and refining industry, making operations more profitable. Overall, this step aims to lower oil prices, making it more affordable for consumers and strengthening the country's oil industry.
Import Duty Reduction
The central government has decided to reduce the import duty on crude edible oil by 10%. This is anticipated to lead to a decrease in oil prices in both wholesale and retail markets. Sudhakar Rao Desai, Director and CEO of Emami Agrotech, told PTI that edible oil prices had increased by approximately 17% in recent months but are now gradually declining and may reach a single-digit level in the coming period.
Market Impact and Mustard Oil Prices
An official from an edible oil manufacturer in Eastern India stated that signs of price reductions are already appearing in the wholesale market. This impact is expected to be visible in the retail market within two weeks, and the changes will not be limited to imported oils alone.
Boosting the Domestic Refining Industry
The government's reduction in import tax on crude edible oil has widened the tax differential between crude and refined oil to 22.5%. This means importing crude oil is now cheaper, while refined oil faces a higher tax. This benefits the domestic refining industry, as they can now purchase crude oil, refine it domestically, and generate higher profits. Importing and refining crude oil domestically has become more profitable, thereby boosting the domestic oil industry and reducing import dependence. Keshav Kumar Haldar, Managing Director of Haldar Venture Limited, described this change as significant for the industry. He stated that this will gradually reduce the prices of imported soybean, sunflower, and palm oil, potentially extending the impact to domestic products like rice bran and mustard oil.
Capacity utilization in the refining sector is projected to increase by 20-25%, strengthening the central government's 'Make in India' initiative and reducing dependence on imported refined oils.
