Edible oil prices may decrease in the domestic market soon, helping to cool food inflation and lessen the pressure on household budgets. Following an order from the food ministry to cut prices by Rs 10-12/liter in view of the decline in global prices and the recent import tax cuts, major producers, including Adani Wilmar and Ruchi Soya, have said that revised retail prices will take effect in the next 7-10 days.
“Global prices of palm and sunflower oils have decreased by 18-20% in the last one month, while it takes about 3-4 weeks to reflect in the retail markets,” BV Mehta, executive director, Solvent Extractors’ Association of India (SEA). The food ministry held the meeting with representatives of leading edible oil makers and processors associations, including Adani Wilmar, Ruchi Soya, Mother Dairy, SEA, and Vanaspati Manufacturers Association of India.
India meets 56% of its annual edible oil consumption via imports and annual imports are around 13-14 million tonnes (MT). Around 8 MT of palm oil is imported from Indonesia and Malaysia, while other oils, such as soya and sunflower, come from Argentina, Brazil, Ukraine, and Russia. In the race to get on top of rising inflation, the government on May 24 allowed tariff-free imports of crude soya bean and sunflower oils during this financial year and the next.
Crude palm oil imports currently attract only a 5% agri-infra cess and a 10% education cess upon it, meaning a total tax incidence of 5.5%. Basic customs duty waiver will apply till September 30. Although global edible oil prices are still elevated compared to a year ago, the decision by Indonesia, the largest global exporter of palm oil, to lift the ban on exports is improving global supplies.