Centre Urges Edible Oil Associations to Maintain Oil’s MRP

Nitin Konde

Sep 19, 2024 — 3 min read

Centre Urges Edible Oil Associations to Maintain Oil’s MRP

Representatives from the Solvent Extraction Association of India (SEAI), the Indian Vegetable Oil Producers' Association (IVPA), and the Soyabean Oil Producers Association (SOPA) were present in a meeting that was chaired by the Secretary of the Department of Food and Public Distribution (DFPD) of the Government of India on 17 September. The purpose of the meeting was to discuss the pricing strategy. To ensure that the maximum retail price (MRP) of each oil is maintained until the availability of edible oil stocks imported at 0% and 12.5% Basic Customs Duty (BCD), the leading Edible Oil Associations were asked to meet with their members as soon as possible and discuss the matter.

The maximum retail price (MRP) of edible oils like sunflower oil, soybean oil, and mustard oil was decreased by the industry earlier as a result of talks that the Department had with the key groups for edible oils. The decline in the price of oil was a consequence of the fall in international prices as well as the reduction in the import duty on edible oils, which resulted in the oils becoming more affordable. It has been suggested to the industry regularly that the domestic prices should be brought into line with the international rates to reduce the burden that is placed on the consumers.

Hiking the Basic Customs Duty on Various Edible Oils

For the purpose of bolstering the prices of indigenous oilseeds, the government of India implemented an increase in the Basic Customs Duty that is applied to a variety of edible oils. Starting on September 14, 2024, the Basic Customs Duty on Crude Soybean Oil, Crude Palm Oil, and Crude Sunflower Oil will be increased from 0% to 20%. This would result in the effective duty on crude oils being raised to 27.5%. Furthermore, the effective duty on refined oils has been raised from 12.5% to 32.5%, resulting in a total of 35.75% from the Basic Customs Duty on Refined Palm Oil, Refined Sunflower Oil, and Refined Soybean Oil.

These modifications are a part of the continuous efforts that the government is making to support domestic oilseed producers, particularly in light of the fact that new soybean and groundnut crops are anticipated to arrive in markets beginning in October for the year 2024.

Factors Behind This Move

Several variables, including increasing global output of soybeans, oil palm, and other oilseeds; higher global ending inventories of edible oils compared to the previous year; and dropping global prices due to surplus production, all played a role in the decision-making process, which was preceded by extensive deliberations. This situation has resulted in an increase in imports of low-cost oils, which has resulted in a downward pressure on the prices of domestic products. The purpose of these policies is to improve domestic oilseed prices, stimulate expanded production, and guarantee that farmers receive fair compensation for their produce.

Central Government is also aware of the fact that there is a supply of edible oils, approximately 30 LMT, that has been imported at a reduced duty. This stock is adequate for domestic consumption for 45 to 50 days.