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Edible oil: Palatable relief

THE Government's decision to sharply hike import duty on edible oils for the third successive time since December 1999, could provide a temporary breather to companies engaged in the marketing of branded oils, which have been facing steady price erosion due to a flood of imports.

While the import duty on the cheapest edible oil- RBD palmolein - has been pegged at 71.6 per cent, that on soft oils such as refined sunflower oil has been pegged at 50.8 per cent. This is likely to diminish, though not remove, the threat of substitutio n by the cheaper imported oils for marketers of sunflower oil. The differential duty structure between crude and refined oils has also been retained. This should continue to result in better utilisation of idle refining capacities. Though global vegetabl e oil prices have moved downward to adjust to the previous two hikes in import duties, the third hike is likely to discourage imports of refined oils to some extent. Companies such as Godrej Foods, Agro Tech Foods and Hindustan Lever are likely to get a measure of relief. -- BL Research Bureau