From UPSC perspective, the following things are important :
Prelims level : Customs Duty, Edible Oil Imports
Mains level : Edible oil scarcity in India
The Union Commerce Minister has announced that the government has decided to waive customs duty on import of crude sunflower, palm and soyabean oil, a move aimed at controlling their prices.
Edible Oil Imports and India
- Given the heavy dependency on imports, the Indian edible oil market is influenced by the international markets.
- Of the 20-21 million tonnes of edible oil that India consumes annually, around 4-15 mt is imported.
- India is second only to China (34-35 mt) in terms of consumption of edible oil.
- Crude and food-grade refined oil is imported in large vessels, mainly from Malaysia, Brazil, Argentina, Indonesia etc.
- Home-grown oilseeds such as soyabean, groundnut, mustard, cottonseed etc find their way to domestic solvent and expellers plants, where both the oil and the protein-rich component is extracted.
Do you know?
Palm oil (45%) is the largest consumed oil, mainly used by the food industry for frying namkeen, mithai, etc, followed by soyabean oil (20%) and mustard oil (10%), with the rest accounted for by sunflower oil, cottonseed oil, groundnut oil etc.
Prices and politics
- Prices of edible oil have been rising across the country since few months.
- Most edible oils are trading between Rs 130-Rs 190/litre.
- Also, the festive season will see increased buying of edible oils.
Impact of the move
- Consumers might not see a drastic reduction immediately in prices of edible oil.
- The reduction in duty is expected to affect the earnings of oilseed growers across the country.
- Over the last few years, the government has taken a series of steps to remove India’s import dependency on pulses, and tried to do the same for oilseeds through national missions.
- However, frequent market interventions that ultimately bring down prices would backfire on the government and veer farmers away from growing oilseeds.
- We need continuity in prices to help farmers stick to oilseeds or pulses.
Back2Basic: Customs Duty
- Customs duty refers to the tax imposed on goods when they are transported across international borders.
- In simple terms, it is the tax that is levied on import and export of goods.
- Custom duty in India is defined under the Customs Act, 1962, and all matters related to it fall under the Central Board of Excise & Customs (CBEC).
- The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.
- The rate of Customs duty varies depending on where the goods were made and what they were made of.
Types of custom duty
- Basic Customs Duty (BCD): It is the duty imposed on the value of the goods at a specific rate at a specified rate of ad-valorem basis.
- Countervailing Duty (CVD): It is imposed by the Central Government when a country is paying the subsidy to the exporters who are exporting goods to India.
- Additional Customs Duty or Special CVD: It is imposed to bring imports on an equal track with the goods produced or manufactured in India.
- Protective Duty: To protect interests of Indian industry
- Safeguard Duty: It is imposed to safeguard the interest of our local domestic industries. It is calculated on the basis of loss suffered by our local industries.
- Anti-dumping Duty: Manufacturers from abroad may export goods at very low prices compared to prices in the domestic market. In order to avoid such dumping, ADD is levied.