Cabinet approves imposition of 5 per cent duty on edible oil imports

The Union Cabinet has approved the imposition of a 5 per cent import duty on crude edible oil and 2.5 per cent import duty on crude palm oil. The measure was earlier proposed by the Agriculture Ministry to protect the domestic industry and farmers.

The Agriculture Ministry had proposed to hike the import duty on crude oil to 7.5 per cent from zero per cent, while on refined oil, it sought to double the duty to 15 per cent.

However, the Finance and Food Ministries felt this would lead to a rise in retail prices and food inflation. India imports over 50 per cent of its domestic demand. In 2011-12 oil year, the country imported a record 10.19 million tonnes of vegetable oils.

In the backdrop of the Ministry's proposal, Agriculture Minister Sharad Pawar, Finance Minister P Chidambaram and Food Minister K V Thomas met Tuesday to reach an understanding on increasing import duty on edible oil to protect palm growers in Andhra Pradesh, an Agriculture Ministry official said.

The Commerce Ministry has also proposed that the government allow export of processed and value added agriculture products even in the event of restrictions or ban on the export of basic farm produce.

Concerned over declining exports, the Ministry is looking at allowing shipments of value-added food products such as casein, sesame oil, peanut butter, fruit pulp, fruit juices and wheat flour. The government does not have a specific policy on the export of value-added products. India either bans exports or puts in place quantitative restrictions on many food items like edible oils and wheat flour. The Ministry is of the view that allowing exports of processed and value added food items will also help in boosting the country's exports.

With inputs from PTI