Scrapping the customs duty and agriculture infrastructure development cess on the import of crude soyabean oil and crude sunflower oil (2022-23 and 2023-24) is rational. Palm oil imports make for over half the total imports in the vegetable oil segment. With Indonesia lifting the ban on exports, India lowering the effective import duty (of 5.5%) merits consideration to help control cooking oil prices and support domestic processing companies. External price and supply shocks have pushed wholesale price inflation to a record high of 15.08% in April across all items. Retail inflation rose to 7.79%, remaining above the RBI’s inflation target.
GoI rightly responded by cutting the excise duty on petrol and diesel. It also lowered the customs duty for raw materials of plastics and steel. Ideally, import duties must be lowered across the board to ensure that lines of value addition have the same level of protection. One line of production will not be privileged over the other if import duty is low and uniform, say, at 5%, on raw materials, intermediates and inputs. This will also help lower prices for the consumer.