New Delhi: The government has reduced the tariff value for the import of edible oil, including palm oil, by up to USD 112 per tonne, a move which experts said can lead to lower domestic prices.
The Central Board of Indirect Taxes and Customs (CBIC), through a notification, has cut the tariff import value of crude palm oil by USD 86 per tonne, and of RBD and crude palmolein by USD 112 per tonne each.
It also reduced the base import price of crude soyabean oil by USD 37 per tonne.
The changes in tariff value of edible oil are effective from Thursday (June 17).
Tax experts said the reduction in tariff value could result in softening of edible oil prices in the domestic market as customs duty payable on the base import price would come down.
AMRG & Associates Senior Partner Rajat Mohan said there is a big gap between domestic production and consumption of edible oils in India, which leads to massive imports and the last few months have seen retail prices rising.
"The ripple effect of this slashing of base import price could be seen in the retail prices, provided the entire supply chain, including the manufacturers, distributors, and retailers, are ready to pass on this benefit to the ultimate consumer," Mohan added.
Domestic edible oil prices have more than doubled in the past year.
India meets about two-thirds of its edible oil demand through imports.
EY Tax Partner Abhishek Jain said tariff value is a deemed value fixed by the government for the purposes of payment of customs duty. This is to say that irrespective of the transaction value, a customs duty will have to be paid on the tariff value so fixed. Also Read: Soaring edible oil prices: Govt asks states and business to take all possible steps to soften rates
"This reduction in the tariff value of edible oils by the government will imply a lower Customs duty payment, thereby entailing a reduction in cost for the importers and end-users/consumers," Jain added.
The government had on Wednesday said edible oil prices have started falling in the past one month and it is working on a series of mid and long-term measures to make the country self-sufficient in the segment.
According to data compiled by the Solvent Extractors' Association of India, the overall import of vegetable oils (edible and non-edible oils) from November 2020 to May 2021 rose 9 per cent to 76,77,998 tonnes, compared with 70,61,749 tonnes in the corresponding period of the previous year.
Edible oil year runs from November to October. Also Read: Good news on edible oil prices! Nearly 20% decline in rates – check revised price list here
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