Edible oil refiners want duty changes

Domestic oil refiners would like the percentage differential between the import duty of crude and refined oils to be raised to restore viability to the oil refining sector.

"The duty differential has to be increased. This can be done by either increasing the import duty on refined oil or reducing the duty on crude oil. It should ideally be maintained around 15 per cent," said B V Mehta, executive director, Solvent Extractors' Association of India (SEA).

"Due to the reduced duty on refined oil imports, more refined oil will come into the market. This will make domestic refining unviable, " he warned.

In 2003, the government had announced a reduction in duty on all imports of palm oil products effective April 30, 2003. As a result, the difference between import duties payable on crude palm oil (CPO) and crude olein, at 65 per cent, and duty on refined palm oil and refined, bleached and de-odourised (RBD) palmolein at 70 per cent, came down to 5 per cent.

The government abolished the special additional duty (SAD) in the mini-budget of January 2004. As a result, the difference in duty between crude and refined soybean oil was eliminated.

The import duty on refined soybean oil was reduced to 45 per cent from 50.8 per cent earlier, (45 per cent + 4 per cent SAD) with effect from April 30, 2003. The duty on crude soybean oil imports remained at 45 per cent.

This eliminated the duty differential between crude and refined oils.