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Centre scraps import duties on crude sunflower and soybean oils

GS Paper 3

Syllabus: Agriculture( major Crops and supply chain management)

 

Context:

  • In a bid to cool inflation inedible oils, the Centre allowed duty free import of 20 lakh tonnes each of crude soybean oil and crude sunflower oil for this year as well as 2023-24.

 

Inflation:

  • Inflation is defined as a situation where there is sustained, unchecked increase in the general price level and a fall in the purchasing power of money.
  • The reason for price rise can be classified under two main heads:
  1. Increase in demand
  2. Reduced supply.
  • In India, inflation is primarily measured by two main indices;
  1. WPI (Wholesale Price Index)
  2. CPI (Consumer Price Index)
  • The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics etc, which Indian consumers buy for use.
  • the goods or services sold by businesses to smaller businesses for selling further are captured by the WPI.
  • In India, both WPI (Wholesale Price Index) and CPI (Consumer Price Index) are used to measure inflation.
  • RBI through its Monetary Policy Committee Controls Inflation with its tools to control Money supply in the market.

 

Import Duty:

  • It is a tax collected on imports and some exports by the customs authorities of the country.
  • It is based on the value of goods that are imported.
  • Import duty may also be referred to as tariff, import tax, customs duty and import tariff.
  • The purpose of import duty is to raise income for local governments and to give market advantage to locally grown or produced goods that are not subject to import duties.
  • It is sometimes used as a tool to penalize a particular nation by charging high import duties on its products.

 

About Edible Oils:

  • More than half of India’s edible oil consumption is imported,
  • India’s dependence on edible oil imports is to the tune of 65%.
  • Sunflower oil accounts for 14% of all edible oil imports
  • India imports edible oils majorly from Ukraine and 20% from Russia(about 70%)
  • India imports palm oil from Indonesia and Malaysia, while Soybean oil comes from Brazil and Argentina.
  • In 2019, edible oils accounted for 40% of agriculture import bills and 3% of overall import bill of the country.
  • Palm Oil (62%) > Soya oil (21%) > Sunflower oil (16%)

 

 

Insta Links

Prelims links:

Inflation

Import duties

Edible oils

Major import countries for edible oils

Mains link:

Domestically incentivising the farmers to grow edible oil producing plants can decrease dependence on imports. Critically analyze.