Context
The Centre has reduced the Basic Customs Duty (BCD) on major imported edible oils amid rising international prices. BCD on crude sunflower oil was cut from 10% to Nil, while that on crude palm and soybean oils was reduced from 10% to 5%.
Explanation
- Basic Customs Duty (BCD) is a customs levy imposed on imported goods; lowering it reduces their landed cost.
- India depends substantially on imports to meet domestic edible-oil demand, making prices sensitive to global prices, freight and exchange rates.
- Lower duties can increase cheaper imports and help moderate domestic retail prices and food inflation.
- BCD on refined palm and soybean oils was reduced from 32.5% to 27.5%, and refined sunflower oil from 32.5% to 22.5%.
- A 19.25% effective import-duty differential between crude and refined oils is maintained to encourage domestic refining and value addition
- Lower import protection can, however, expose domestic oilseed farmers to greater competition from imports.
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