India will allow duty-free imports of soybean and sunflower seed oil under the tariff rate quota effective from May 11, a government notification has said.
“The central government on being satisfied that it is necessary in the public interest, exempts crude soybean oil, whether or not degummed, and crude sunflower seed oil when imported into India from the whole of the customs duty and from the whole of the agriculture infrastructure and development cess (AIDC),” the notification said.
These duty-free imports will be allowed till June 30, 2023. The importer will have to produce to the customs a valid tariff rate quota (TRQ) authorisation for the financial year 2022-23 allotted by the Directorate General of Foreign Trade to avail the duty-free imports.
The TRQ is allotted to the importer by the Directorate General of Foreign Trade (DGFT) in accordance with the relevant procedure. The authorisation contains the name and address of the importer, customs notification number, tariff item as applicable, quantity and validity period of the certificate. The authorisation is issued electronically by the DGFT and transmitted to Indian Customs EDI Systems (ICES). Imports made against the TRQ are allowed only upon debiting electronically in the ICES system.
The duty exemption on soyabean and sunflower edible oil is being seen as the government's efforts to bring down its prices for consumers.
"Considering the surge in demand for edible oil imports, this exemption has been introduced for a limited time period. The objective of exempting these products from customs duty and AIDC is governed by the need for price regulation and control inflation. Oils are an integral part of the food basket of the average Indian and any duty waivers on such essential commodities is expected to reduce inflationary pressures. Further, one of the reasons for the limited time frame and quota could be to avoid excess hoarding of these commodities," Siddharth Surana, Director, tax consulting firm RSM India, told Moneycontrol.
The Centre has been asking the edible oil companies to cut the prices of cooking oils. India imports soyabean oil majorly from Argentina and Brazil. Duty free imports is likely to increase the supply of edible oil and reduce retail prices for consumers.
"The Indian government has exempted crude soya-bean oil and crude sunflower seed oil from customs duty and agriculture infrastructure and development cess as part of its efforts to provide relief to consumers from the high prices of edible oils in the country and make them more affordable. This move is also expected to provide some relief to the food processing and hospitality industries, which were hit by the high prices of edible oils earlier," Rajat Mohan, Senior Partner, AMRG & Associates, told Moneycontrol.
In order to control the pricing it seems to be an encouraging move. The government has extended the timeline for those importers who have allocated TRQ for FY 2022-23 till Jun 30, 2023. Once the TRQs have been utilised, the exemption would be withdrawn and the focus will be to utilise the domestic production and support the farmers who have excess production lying with them with remunerative prices for their crop, Ankur Gupta, Practice Leader, SW India, told Moneycontrol.
"Further, once the exemption is withdrawn, there might be a slight increase in the prices of these products as the customs duty could be in the range of 5% to 20%," he said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
