India Hikes Import Duty on Crude, Refined Oil by 5%

To shore up revenues and protect domestic interests, the Union finance ministry has increased import duties on crude and refined oil by 5%.

The customs duty on crude oil goes up from 2.5% to 7.5% and the duty on refined edible oil is now 15%, up from 10% earlier.

The crash in crude oil prices has allowed the government to breathe easy, with the current account deficit (CAD) being in line with expectations.

As crude oil prices have crashed by almost half, the government seeks to benefit from the increase in customs duty. 

India is the world's third largest importer of fuel, at 4 million barrels a day.

The refined edible oil import saw rates go to 15% from the earlier 10%, a development that is bound to affect consumer price.

The respective ministries for the two sectors had earlier sought proposals from the finance ministry to increase the duty rates, reports The Indian Express.

India relies on import for about 60% of its domestic demand in vegetable oils – edible and non-edible oil, at about 19 million tonnes. The fiscal year 2013-14 saw record levels of import at 11.82 million tonnes, an increase of almost 12% over the previous year, backed by strong domestic demand and depressed international prices.

The local industry body Solvent Extractors' Association has been calling for a duty hike to protect domestic oilseed processors.

Food Minister Ram Vilas Paswan had met Arun Jaitley, Finance Minister, to discuss import duty structure.