Can edible oil soon become cheaper in the country?
The Federation of All India Edible Oil Traders has said that consumers will get cheaper edible oil only when the government removes 5 percent GST (GST) on oil and oilseeds instead of exemption from import duty.
The Federation of All India Edible Oil Traders has said that consumers will not get the benefit of the 5.5 percent cut in import duty on crude soybean and sunflower oil last week. Consumers will get the benefit when GST exemption is given. Federation President Shankar Thakkar said that only a few big companies or importers will get the benefit of reducing the import duty on crude soybean and sunflower oil. This decision can be beneficial only for the licensed large processing mills and not for the common people and common traders. Thakkar said not every processor has a license to import. Whereas this exemption will be available only to licensed importers.
The federation said in a statement that it would not be possible for every processor to take advantage of it. The newcomers cannot come under this, because they have to give the details of the processing done in the last years to take advantage of this scheme, which is natural that the new producer cannot have. If after this decision the price comes down to Rs 8 per kg, then it will be considered that its effect is visible on the ground.
Why is the federation raising questions?
Large importers of raw soybean and sunflower will be able to take advantage of 5.50 per cent of the total cost, but now the question is whether they will pass that benefit to the consumer? How to know whether the benefit has reached the consumers or not. Thakkar says that the government will have to set up a monitoring mechanism to pass on the benefits to the consumers. The quantity in which the importer orders the goods under this scheme, its price should be reduced in the same proportion and it should be ensured whether it is sold or not.
How much profit should reach the consumers
If the government now monitors, then all the big companies will also have to reduce the MRP while selling the imported goods through this scheme in the domestic market, because the company or trader has taken advantage of tax exemption. With this tax exemption, the price can be reduced by about Rs 8 per kg. If this happens, then only then the benefit of exemption in import duty will be considered to have reached the consumers. At present, refined oil is being available in the markets at a price of up to two hundred rupees per liter.
Thakkar said that small processors of crude soybean and sunflower oil will not be able to take advantage of tax exemption. It will also become difficult for him to compete with big companies. So it will be more challenging for small traders. The leader of the federation raised the question that whether the government did not make this plan to benefit a few selected companies and remove small producers and traders from this business?
Will consumers get the benefit?
The organization’s General Secretary Tarun Jain said that India can import 45 to 5 million tonnes of soya oil this year, while the exemption in import duty is only on 20 lakh tonnes. If the total imports are considered to be 5 million tonnes, then the tax exemption sits around two percent. Will companies allow the benefit of this modest discount to reach the consumers, that is a difficult question. On the other hand, oil is being imported from SAARC countries at zero duty indiscriminately for the last 3 years.
Given this, there is a question mark on how beneficial this discount will be for the consumers. Therefore, instead of exemption from import duty, the government needs to remove 5 percent GST (GST) on oil and oilseeds to benefit the consumers directly.
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