Festive season ahead: Govt urges edible-oil processors to cut retail prices after duty cuts

The government has urged edible oil processors to cut retail prices, Bloomberg reported on Tuesday.

This comes just days after the government cut customs duty on imported crude edible oils to soften the domestic edible oil prices, which have gone up from the sharp increase in international edible oil prices.

India is the world's biggest buyer of edible oils.

The benefits of the tax reductions should be passed on to consumers as soon as possible ahead of the upcoming festive season, Food Secretary Sanjeev Chopra said at the annual meeting of the Solvent Extractors' Association of India in Mumbai.

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The government is seeking to ensure adequate supplies of cooking oils at reasonable prices, he said.

On September 24, the government cut the basic customs duty on major imported crude edible oils to moderate domestic prices, provide relief to consumers, and contain inflationary pressures from higher international edible-oil prices.

The duty on crude sunflower oil was cut from 10% to nil. The duty on crude soybean oil and crude palm oil was reduced from 10% to 5%.

The government also reduced the applicable duty on the corresponding refined edible oils while maintaining a 19.25% difference in import duty between crude and refined oils.

The government said the duty changes take into account higher international edible-oil prices and the resulting increase in domestic landed costs and retail prices.

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Import duties form an important part of the landed cost of imported edible oils and affect domestic market prices.

The reduction in duties on crude oils was expected to lower their landed cost and allow the benefit to pass through the domestic supply chain.

The government had also advised edible-oil associations and industry stakeholders to ensure that the full benefit of the duty reduction reaches consumers.

Industry stakeholders had been asked to immediately revise their Price to Distributors and Maximum Retail Prices in line with lower landed costs.

Edible-oil associations had also been asked to advise their members to implement the corresponding price reductions without delay.

The government said it would continue to monitor international edible-oil markets and domestic prices and take appropriate measures, if necessary, to protect consumers while maintaining a balanced policy for farmers and the domestic edible-oil industry.