Import Duty on Edible Oils Reduced - Import Duty Exemption on Milled Rice Extended - Tariff Values of Crude Palm Oil Frozen

Government has been keeping a close watch on the domestic and international prices of essential commodities, particularly food items such as wheat, rice, pulses, and edible oils so as to keep inflation under check. It has also taken appropriate fiscal measures from time to time to achieve this objective. Full exemption from customs duty available to wheat has been extended beyond the expiry date of 31^st December, 2007 and wheat flour has also been fully exempted from customs duty.

Over the last six months, the international price of rice has increased sharply from US $ 430 (August 2007) to US $ 590 (February 2008) (FAS US Gulf). Domestic retail price in Delhi markets increased from Rs.15 to Rs.18 per kg over the same period.

Owing to a surge in demand, international prices of edible oils have also continued to exhibit a sharp and steady upward trend in recent months. For instance, the international price of crude palm oil (fob Malaysia) has increased from US$ 770 PMT in the last week of August, 2007 to about US$ 1220 PMT in the last week of February, 2008. During the same period, the international price of sunflower oil (c.i.f. Rotterdam) has increased from US$ 947 to US$ 1695 PMT - an increase of about 79%.

  An increase of this order has obviously put pressure on domestic prices of edible oils despite two rounds of reductions in customs duties on palm oil in April, 2007 (by 10 percentage points) and again in July, 2007(by 5 percentage points). Wholesale prices of RBD palmolein (Mumbai) have increased from Rs.4500 per quintal in August 2007 to Rs.5820 per quintal in February, 2008.  Over the same period, price of sunflower oil (Mumbai) has increased from Rs. 4900 per quintal to Rs. 8250 per quintal and of mustard oil (Delhi) from Rs. 4960 per quintal to Rs. 6330 per quintal.

To cushion the impact of increase in international prices of rice and edible oils, with effect from the midnight of 20^th/21^st March, 2008 Government have reduced import duty on these items as under:

(a)  Semi-milled or wholly milled rice from 70% to Nil.  This exemption would be available only upto 31.03.2009.

(b) Crude palm oil including crude palmolein from 45% to 20%;

(c) Refined palm oil including RBD palmolein from 52.5% to 27.5%;

(d) Crude Mustard/rapeseed/colza/canola oils from 75% to 20%;

(e) Refined Mustard/rapeseed/colza/canola oils from 75% to 27.5%;

(f) Crude sunflower oil from 40% to 20%; and

(g) Refined sunflower oil from 50% to 27.5%.

Besides, the tariff values of crude palm oil (US $ 447 PMT), RBD Palm oil (US $ 476 PMT), crude palmolein (US $ 481 PMT), and RBD Palmolein (US $ 484 PMT) have been frozen at July, 2006 prices.

Notification No.37/2008-Customs dated 20^th March, 2008 has been issued in this regard.

BSC/ GN-71/08