Cheap edible oil is coming from Argentina and Brazil via Nepal.
24-Dec-2024 09:10 PM
The situation described highlights the impact of high customs duties in India on the import of edible oils, leading to the rise in domestic market prices. To counter this, Nepal has been increasing its imports of soybean oil and sunflower oil from Argentina and Brazil, which are then sold in the Indian market at a more affordable price. This trade route benefits Indian consumers by reducing prices of refined oils but causes a financial strain on Indian entrepreneurs.
Here are some key points:
Effect of Customs Duties in India: High customs duties on edible oils have made legal imports expensive, raising domestic market prices. This was followed by a rise in retail prices of refined oil in India to above Rs 150 per kg.
Nepal's Role: Since Nepal doesn’t impose customs duties on exports, it has taken advantage of this situation. By importing oils from Argentina and Brazil, which are not subject to these taxes, Nepal is able to sell soybean and sunflower oils at cheaper prices in the Indian market. Nepal's geographic proximity to India also facilitates easy transportation of these goods by road.
Impact on Prices: As a result, the retail price of refined oil in India has decreased by Rs 10-15 per kg, and the wholesale price has fallen by up to Rs 150 per tin (15 kg). Specific oils, such as refined soybean oil, have seen their retail prices drop from Rs 160-165 to Rs 150 per liter, and the wholesale price from Rs 150 to Rs 138 per liter.
Challenges for Entrepreneurs: While consumers are benefiting from lower prices, Indian entrepreneurs are facing losses due to the competition from cheaper imports via Nepal. The reduced market prices are impacting the profitability of local businesses.
Government Measures: A few months ago, the Indian government had raised import duties on crude and refined edible oils by 20%, and also increased the export duty on palm oil from countries like Indonesia and Malaysia. These measures have led to the earlier surge in prices, which has now seen some relief with the cheaper imports via Nepal.
Mustard Oil Prices: While the prices of refined oils have reduced, mustard oil prices remain stable, with the retail price at Rs 170 per liter and the wholesale price at Rs 150 per liter.
In summary, while consumers in India are experiencing relief from the high cost of edible oils, entrepreneurs and businesses in India are feeling the negative effects of this cheaper, duty-free oil coming from Nepal.