Refined oil imports into the country is set to increase following the relaxation of norms relating to import rates on crude palm oil (CPO) as well as 2.5 per cent import duty.

Union Food Minister K V Thomas said that the government is de-freezing of import rates on the commodity and 2.5 per cent import duty. The ministry also said that the new tariff rates and the duty charges are yet to be notified.

Following the implementation of the new charges, many refiners may opt for importing the oil and marketing it in the country. Data shows that the share of refined oil in total import of vegetable oils has increased from 3 per cent during the period November 2006 to October 2007 to 16 per cent in the same period of 2011-12. The charge might be a threat to the domestic refining industry that depends upon import of crude palm oil (CPO).

Satyanarayan Agarwal, advisor, Central Organisation for Oil Industry & Trade said, "With the negligible import levy, the differential duty between crude and refined oil has narrowed to five per cent, which indicates that processing of crude oil in domestic refineries will yield a loss. Processing of crude oil would be profitable only with a minimum differential duty of 10 per cent."