The Indian government reduced the refined soybean oil and refined sunflower oil import duty with hopes of containing food inflation. But, according to traders, this action was linked with sentiments instead of any focus on the ground since India hardly imports those oils.
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The majority of soybean oil and sunflower oil is imported into India when they are in a crude state and undergo refining in India. Additionally, the exporting nations lack their own large refining capacities.
The import duty reduction for soy oil was 12.5 percent from the previous 17.5 percent, while the one for refined sunflower oil was cut similarly.
Crude soybean oil, sunflower oil, and palm oil import duties stand at 5.50 percent. The difference in crude oil and refined oils duty stays significant to avert any major imports.
The decision for cutting duties counters the market sentiment, which had anticipated a hike in duties since prices for both domestic and international edible oil sank in the last months.
According to traders, the clashing decision indicates that the government is majorly worried about food inflation as a big election awaits this year, and there are looming fears over the aftermath of the El Niño monsoon.
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As per the Procurement Resource article, the central government in India made import duty cuts on various oils while the market sentiment hinted towards an increase in those duties. The reason behind the action was the looming worries regarding the food inflation and uncertainty caused by the El Niño monsoon. The government's main goal is to keep prices under check.
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