The Cabinet Committee on Economic Affairs (CCEA) is likely to consider tomorrow Agriculture Ministry's proposal of raising import duty on crude edible oil by 5 per cent to protect domestic industry and farmers.
That apart, CCEA will also consider Commerce Ministry's proposal seeking exports of processed and value added agricultural products even if there is a ban on basic farm produce.
"The CCEA is scheduled to meet tomorrow and among other things it will consider the proposal of hiking import duty on crude and refined edible oil and on export of processed food," a source in know of the development said.
Agriculture Ministry had proposed to hike import duty on crude oil to 7.5 per cent from zero per cent, while on refined oil, it sought to double the duty to 15 per cent. However, the Finance and Food Ministries felt this would lead to rise in retail prices and food inflation.
At present, there is zero duty on crude edible oil and 7.5 per cent on refined edible oils. India imports over 50 per cent of its domestic demand. In 2011-12 oil year, the country imported a record 10.19 million tonnes of vegetable oils.
In the backdrop of the Ministry's proposal, Agriculture Minister Sharad Pawar, Finance Minister P Chidambaram and Food Minister K V Thomas met yesterday to reach an understanding on increasing import duty on edible oil to protect palm growers in Andhra Pradesh, an Agriculture Ministry official said.
"A middle path is likely to be adopted. Agriculture Ministry may propose 5 per cent duty on crude edible oil and duty on refined edible oils would also be hiked, but it would be lower than 15 per cent," the source said.
That apart, the Commerce Ministry has proposed that the government allow export of processed and value added agriculture products even in the event of restrictions or ban on the export of basic farm produce, the source added. Concerned over declining exports, the Ministry is looking at allowing shipments of value-added food products such as casein, sesame oil, peanut butter, fruit pulp, fruit juices and wheat flour.
"Due to uncertainty over the policy, global buyers do not trust Indian exporters. So there is a need for such a policy that will help in enhancing credibility of our exporters," the source said.
Government does not have any specific policy for exports of value-added products. Besides, India either banned exports or put in place quantitative restrictions on many food items like edible oils and wheat flour.
The Ministry is of the view that allowing exports of processed and value added food items would also help in boosting country's exports.
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