The Centre would not hesitate to raise import duties on edible oils and chana up to their “bound rates” applicable under the World Trade Organization (WTO) rules to protect farmers, senior government officials said.
The import duty on crude edible oils now is 25-30 per cent. In the case of refined oils, it is 35-40 per cent. For chana, it is 40 per cent.
If the proposal goes through, there could be a massive hike in import duty (over 200 per cent in case of some edible oils), while it could go up by 60 per cent in chana. The bound rate for soybean oil is 45 per cent and the existing is 30 per cent.
Bound rates are the maximum permissible ones under WTO agreements. The thinking within a
section of the government is that incremental increases in import duties do not help farmers.
The government might either increase export incentive under various schemes, including the Merchandise Export Incentive Scheme for chana and soymeal from 7.5 per cent to 10 per cent, while the incentive on sugar could also be raised.
“All these were discussed at a high-level meeting of senior ministries. A decision can be expected after consultations with all ministries and departments,” an official said.
Just a few weeks ago, the Centre had doubled import duties on crude oil and refined edible oils to 40 per cent for chana.
But sources said the move hadn’t had the desired impact of raising farm-gate prices. Hence the discussions for further increases.
Officials said such a sharp hike in import duties would be temporary.