On Sunday, the Centre imposed stock limits on oilseed and edible oil traders until 31 March 2022. The decision of the Centre will curb the price surge of edible oils in the domestic market and give relief to customers across India.
The department of food and public distribution ordered stock limits on oilseeds and edible oils with immediate effect. There is a suspension of futures trading in oilseeds and mustard oils on the National Commodity and Derivatives Exchange Limited (NCDEX) platform from 8 October 2021.
Government Measure to Reduce Edible Oil Prices
The edible oil prices in the domestic retail market have increased by up to 46.15% in the last year due to the local supply situations and global factors. The high edible oil prices in the international market have a substantial impact on domestic edible oil prices. India meets more than 60% of its edible oil demands through imports.
However, the government has formulated a multi-pronged strategy to ensure that the prices of essential commodities like edible oils remain under control. The government has already undertaken various measures like launching a web portal for self-disclosure of stocks held by several stakeholders, rationalisation of import duty structure, etc., to control essential commodities prices.
The government is also operating a centrally sponsored scheme called the National Mission on Edible Oils-Oil Palm (NMEO-OP) to reduce imports dependency and increase the domestic production of edible oils.
Exemptions on Stock Limit on Edible Oil
The respective state governments or Union Territories (UTs) will decide the stock limit of all oilseeds and edible oils based on consumption pattern and available stock of the state or UTs. However, the Centre exempted the following from the stock limit-
- Exporters who have an Import-Export Code (IEC) number issued by the Director-General of Foreign Trade (DGFT) and when they can show that the whole or part of their stocks is meant for exports, it is exempt from the stock limit.
- Importers who can show that part of their stocks regarding edible oils and edible oilseeds are sourced from imports, such stocks are exempt from the stock limit.
However, the exemption of the stock limit applies only to the following category of exporters and importers-
- Refiner
- Miller
- Extractor
- Wholesaler
- Retailer
- Dealer
Declaration of Stock Details
When the stocks held by legal entities are higher than the prescribed limits, they must declare the same on the Department of Food and Public Distribution portal. After declaration on the portal, the legal entities must bring the stock limits to the prescribed limits decided by the states or UTs where they conduct business within 30 days of the notification by the said authorities.
The states must ensure stock details of oilseeds and edible oils are regularly declared and updated on the Central Government’s portal. The Centre’s imposition of a stock limit on oilseeds and edible oils until 31 March 2022 will reduce their prices and bring relief to consumers.
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For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in
I am an Advocate by profession. I interpret laws and put them in simple words. I love to explore and try new things in life.
