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Govt Could Go For Rice Export Ban And Duty Cuts On Edible Oil And Steel

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The cabinet committee on Prices met on Monday to consider measures to control the runaway inflation, which touched a record 6.68 percent for the week ended March 15. the measures would include fiscal, monetary and supply-side. this meeting comes against a background of record inflation, high import prices of key food items and intense worry over adverse political impact.

The price spike is impacted largely by the global shortage in key agri products and other commodities. The possible measures being considered were aimed at providing comfort to consumers, who have seen a huge spike in their home budgets thanks to the hike in prices of food items.

The commodities on which duty cuts look imminent include edible oil, steel and cement is also exploring possibilities of disincentivising exports of key commodities like non-basmati rice, sugar and steel.

The meeting, which went on for well over two hours, took stock of measures not just on the food side but also on other commodities, including duty cuts on edible oil and steel, and possible ban on all non-basmati rice.

A cut in import duties on soyaoil, sunflower and palm oil were high on the agenda. This could impact retail price of the oil to the extent of Rs. 2-3. Palm oil group duties were also considered for a cut, given that the last reduction resulted in a price drop of Rs. 2-3 per kg on refined palm oil, the most consumed edible oil.

The possible duty cut is expected to bring down prices from the current Rs. 65/kg in retail to around Rs. 60. Refined palm oil prices came down to Rs. 57/kg from Rs. 62/kg after the duty cuts effected recently. Sections in the government are understood to be reluctant to reduce duties to zero since this would impact domestic oilseed growers adversely. Some 30 percent of the country’s consumption still depends on domestic processed edible oil.

These steps come close on the heels of duty reduction on edible oils and rice to contain prices in the domestic market. While the customs duty on rice was slashed to nil from 70 percent on March 20, duty on all crude and refined edible oil imports was substantially reduced from the current level of 52 – 75 percent to 20 percent and 27.5 percent, respectively.

Palm, soyabean and sunflower oil together accounted for less than 4 percent of the total domestic consumption in the 70s while groundnut oil accounted for 53 percent. Currently though, palm and soyabean oil account for 38 percent and 21 percent, respectively, of the total consumption.

The government had already imposed a MEP on rice exports in October last and tightened it further last week, pegging basmati varieties MEP at $1,100/tonne.

Source: Hindustan Times

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Tags: cabinet committee on Prices, custom duty, edible oil, import prices, rice, soyabean, Steel