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The Hindu
3 days ago
- Business
- The Hindu
Naidu urges Amit Shah to rollback move on crude palm oil
Chief Minister Nara Chandrababu Naidu in a letter urged Union Home Minister Amit Shah to reconsider Centre's decision to reduce import duty on crude palm oil. A delegation led by Telugu Desam Party Lok Sabha floor leader Lavu Sri Krishna Devarayulu along with other TDP MPs and Union Civil Aviation Minister K. Rammohan Naidu called on Union Home Minister in New Delhi on Tuesday (June 17). The delegation submitted Mr. Naidu's letter urging the Centre to reconsider it decision to reduce import duty on Crude Palm Oil (CPO) by 10%, as per Gazette notification released on May 30. In his letter, Mr. Naidu highlighted that the timing of the duty reduction — announced during the peak plantation season — could seriously disrupt the success of the National Mission on Edible Oils – Oil Palm (NMEO-OP) and hurt farmer income. 'The reduction in import duty will lead to an immediate drop in the price realisation for existing Oil Palm growers, thereby eroding their confidence and potentially dissuading prospective farmers from adopting this high-potential crop,' the CM said. 'This decision, while perhaps intended to address short-term concerns, stands to seriously undermine the long-term vision and efforts being made by both the Government of India and the States, including Andhra Pradesh, to promote oil palm cultivation under the NMEO-OP,' he said. Andhra Pradesh accounts for over 50% of the total oil palm cultivation area in India, with 1.74 lakh farmers cultivating across 2.49 lakh hectares. The State has already achieved 67,727 hectares of oil palm coverage from 2021–2025, and targets an additional 50,000 hectares this year under the NMEO-OP, the letter mentioned. The Chief Minister further said, 'Andhra Pradesh has taken proactive steps to promote Oil Palm expansion, including provision of incentives as per NMEO-OP, infrastructure development and farmers' outreach through awareness programmes and deep technologies with AI tools. However, such policy decisions at the national level risk undoing the momentum that has collectively built.' Meanwhile, Mr. Devarayulu reinforced the need for policy revision and support to farmers. 'Given the vital role these groups play in implementing NMEO-OP, I urge the Ministry of Cooperation to take cognizance of the issue and work with stakeholders to ensure price support and stability,' he urged Mr. Shah.
Mint
04-06-2025
- Business
- Mint
Mint Primer: Rise and fall of edible oil duties: Who benefits?
More than eight months after imposing a 20% basic customs duty on crude soybean, palm and sunflower oil, the government has reduced this duty by 10%. What is the move aimed at and what will be the impact on fast moving consumer goods (FMCG) companies? Also Read | GST mop-up: The signals for India's economy & taxes What happened in September last year? That's when the government increased the basic customs duty on various edible oils (crude and refined) to protect domestic producers from cheap imports and encourage local cultivation of crops. Effective 14 September, the basic customs duty on crude soybean, palm and sunflower oil was raised from 0 to 20%, making the effective duty on crude oils as high as 27.5%. Similarly, the basic custom duty on refined palm, sunflower and soybean oil was raised to 32.5% from 12.5%, with an effective duty rate of 35.75%. This added to the overall household inflation as manufactures passed on higher prices to consumers. Also Read | Who is liable if a friendly chatbot 'abets' suicide? Why were the duties hiked? India relies heavily on edible oil imports, which meets 57% of its demand. The Centre attributed its decision to increased global production of oilseeds and resultant falling international prices. This glut resulted in cheap imports flooding India, pushing down prices for domestic farmers. Raising the cost of imported edible oils, the thinking ran, would lead to increased procurement, thus supporting more production and ensuring fair compensation for farmers. Additionally, a National Mission on Edible Oils–Oil Palm was launched in October to further support domestic oilseed production. Also Read | YouTubers vs ANI: Fair-use in the spotlight What happened as a result of the government move? Following the hike, packaged oil firms like Marico and AWL Agri Business Ltd passed on prices to consumers, raising household spending on essentials. Packaged food makers also faced edible oil inflation. For instance, palm oil prices surged 43% in the December quarter, leading biscuit-maker Britannia Industries to implement price hikes totalling ₹100 crore in that quarter. How did the Centre respond? Effective 31 May, the basic customs duty on the three crude oils was cut from 20% to 10% in a bid to stabilize edible oil prices and boost demand. The effective import duty on these three products, which includes basic customs duty and additional fees, now stands at 16.5%, down from the previous 27.5%. Meanwhile, the basic customs duty on refined oils remains unchanged at 32.5%, a decision industry bodies such as the Solvent Extractors' Association of India believe will create a level playing field for domestic refiners. What does the cut mean for FMCG firms? It is expected to lower edible oil prices for consumers in the next 25-30 days as companies pass on the benefits. It should also ease the pressure of commodity costs for packaged food companies. Key beneficiaries include Bikaji Foods, Britannia Industries, Nestle India and ITC's food business, according to Nuvama Institutional Equities. Analysts also expect improved margins for FMCG firms over the next two quarters. Other companies could also benefit if palm oil derivatives, used in soaps and detergents, become cheaper.
