On 19th September, 2024, the Chamber of Small Industry Association (COSIA) submitted a representation to Smt. Nirmala Sitaraman, Hon’ble Finance Minister of India, regarding the recent hike in custom duty on vegetable oils as per Notification No. 43/2024-Customs. This notification, effective from 14th September, 2024, has raised the import duty on vegetable oils by a staggering 22%, leading to significant concerns among our members and the broader industry.
Key Concerns Highlighted:
- Surge in Edible Oil Prices: The increase is expected to raise edible oil prices by Rs. 12 to Rs. 18 per kg, which will directly affect consumers and contribute to inflationary pressures in the economy.
- Impact on Fatty Acid Producers: Domestic producers of fatty acids, such as stearic acid, are likely to raise prices by Rs. 8 to Rs. 10 per kg. This escalation will ripple through various industries, including personal care and food, leading to higher consumer prices.
- Export Competitiveness at Risk: Many exporters lack the capacity to import fatty acids under the advance license scheme, forcing them to rely on more expensive local alternatives, thus undermining their competitiveness in global markets.
- Market Dynamics Disruption: Suppliers from countries like Malaysia and Indonesia may exploit the increased domestic prices by quoting higher rates to Indian buyers. This situation could negate the intended benefits of the advance licensing scheme, placing Indian exporters at a disadvantage compared to competitors in regions like China.
Our Request:
COSIA urges the Government of India to reconsider this duty hike and engage in constructive dialogue with industry stakeholders. A balanced approach is crucial to ensure the sustainability and competitiveness of MSMEs while safeguarding consumer interests.
