Central Government cut tax on imports of crude palm oil (CPO), from 7.5 percent to 5 per cent. It came into effect on February 13, 2022.

Key Facts

• India is world’s biggest edible oil importer. It tries to rein in local prices of commodity and help domestic consumers and refiners.

Reduction in the tax

• Reduction in the tax is also known as “agriculture infrastructure and development cess (AIDC)”.
• It will widen the gap between refined palm oil import duties and CPO.
• The tax reduction is effectively making it cheaper for Indian refiners to import CPO.
• After the reduction in AIDC, import tax difference between CPO and refined palm oil would increase to 8.25 per cent.
• This reduction will help Indian refiners, but government needs to further increase difference to 11 per cent in order to encourage local refining.