India Permits Imports of Corn and Vegetable Oils at Concessional Duties

India has recently announced a measure to address food inflation by permitting limited imports of essential commodities under the tariff-rate quota (TRQ) framework. This move, aimed at easing the burden on consumers, includes corn, crude sunflower oil, refined rapeseed oil, and milk powder. Under TRQ, importers benefit from reduced or zero tariffs, strategically implemented to stabilize food prices within the country.

As the world's largest importer of vegetable oils like palm oil, soyoil, and sunflower oil, and being a major milk producer, India's decision to allow these imports is significant. The government has sanctioned specific quotas: 150,000 metric tons each for sunflower oil or safflower oil and refined rapeseed oil, 500,000 tons for corn, and 10,000 tons for milk powder. These allocations aim to address the persistent food inflation, which has hovered around 8% year-on-year since November 2023, complicating efforts to reduce interest rates.

To manage these imports efficiently, the government has identified cooperatives and state-run entities such as the National Dairy Development Board (NDDB), the National Cooperative Dairy Federation (NCDF), and the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED). These organizations will oversee the procurement and distribution of the imported commodities, ensuring they meet India's stringent standards, including the prohibition of genetically modified organisms (GMOs) in food crops.

India heavily relies on imports to meet nearly two-thirds of its vegetable oil demands, sourcing primarily from countries like Indonesia, Malaysia, Russia, Ukraine, Argentina, and Brazil. While India excels as the world's largest milk producer, recent increases in milk and dairy product prices have been driven by robust domestic demand amidst constrained supplies.

The decision to import corn comes amidst rising domestic prices fueled by strong demand from both the poultry and ethanol industries. This move not only aims to stabilize domestic food supplies but also supports sectors heavily reliant on these commodities.

In conclusion, India's strategic decision to allow concessional imports under TRQ reflects its proactive approach to manage food inflation and ensure food security. By leveraging international markets for essential commodities, India seeks to balance domestic supply-demand dynamics effectively. This measure is pivotal in supporting economic stability and addressing the challenges posed by adverse weather conditions impacting crop yields and subsequent food prices.

India primarily imports palm oil from Indonesia & Malaysia, with a lower quantity of crude soft oils like soybean oil coming from Argentina. Sunflower oil is sourced from Ukraine and Russia, while peanut oil is imported from Brazil and rapeseed oil from Germany and Canada.