Centre Asks Edible Oil Associations To Maintain MRP

The Union government advised leading edible oil associations on Tuesday to ensure that the maximum retail price is maintained till there is availability of edible oil stocks imported at nil and 12.5% basic customs duty.

The secretary of the Department of Food and Public Distribution chaired a meeting with the representatives from the Solvent Extraction Association of India, the Indian Vegetable Oil Producers' Association and the Soyabean Oil Producers Association to discuss their pricing approaches, according to an official release.

Similar meetings were held between the authorities and oil associations, which led to the MRP of edible oils like sunflower oil, soyabean oil and mustard oil being reduced, the Ministry of Consumer Affairs, Food & Public Distribution said.

The reduction in oil prices had come on the heels of a reduction of international prices and reduced import duty on edible oils, making them less expensive. The industry has been advised to align the domestic prices with the international prices in order to reduce the burden on the consumers, according to the release.

The government has implemented an increase in the basic customs duty on various edible oils to support domestic oilseed prices. The basic customs duty on crude soybean oil, crude palm oil, and crude sunflower oil has been raised from 0% to 20%, making the effective duty on crude oils to 27.5%, it said.

The basic customs duty has also been increased on refined palm oil, refined sunflower oil, and refined soybean oil from 12.5% to 32.5%, bringing the effective duty on refined oils to 35.75%. This mandate will be effective from Sept. 14.

The changes were made to improve the profitability of domestic oilseed farming, noting that new soybean and groundnut crops are expected to arrive in markets in October.

The decision was taken due to an increase in global production of soybean, oil palm, and other oilseeds, higher global ending stocks of edible oils compared to the previous year and falling global prices due to surplus production.

This situation had led to a rise in cheap oil imports, which was driving down domestic prices. The cost of imported edible oils was increased to counter this, according to the authorities.

The goal was to boost domestic oilseed prices, encourage more local production, and ensure that farmers get fair prices for their crops, it said. "Central Government is also aware that there is close to 30 LMT stock of edible oils imported at lower duty, which is sufficient for 45 to 50 days of domestic consumption."