Govt may move on edible oil duties

Perturbed by reports that Pakistan is gaining ground in the processing of edible oil at the expense of the Indian refiners, the government is likely to take a decision on the import duties for crude and refined edible oil.

The finance ministry has written to the agriculture ministry explaining its stand on the level of support that should be given to edible oil refiners, user industries and farmers.

The move is significant as the various lobbies have made vigorous contrasting claims. While the farmers have asked for reverting to the pre-Budget position of a high 85 per cent import duty on crude palm oil, some industry associations want a hike in the customs duty on refined oil.

On the other hand, some associations, like that of vanaspati manufacturers, want the present regime to be liberalised further.

Some companies have also maintained that due to the strict definition of imported crude edible oil, the refiners in Pakistan have become more competitive.

While the finance ministry feels there is no basis for such comparisons, the issue has created some disquiet.

The annual edible oil requirement of the country is about 10 million tonnes, of which domestic production accounts for about 0.6 million tonnes and the balance is imported as palm oil, mainly from Malaysia and to some extent from Indonesia.

In Budget 2003-04, Finance Minister Jaswant Singh had lowered the customs duty on refined bleached and deodorised palm oil from 85 per cent to 70 per cent and also exempted refined palm oil from Special Additional Duty of four per cent.

The duty on crude palm oil and olein is 65 per cent. Singh had argued that since crude edible oil constituted only three per cent of the total oil imports, the measure would not harm the domestic oil industry.

But subsequently the finance ministry had been inundated with requests from the oil refiners to reverse the cut. They complained that taking advantage of the slash in the customs duty on crude, there was a surge of import of refined oil from Southeast Asia.