UPSC Prelims 2018 Question:

Consider the following statements:

1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
2. The Government does not impose any customs duty on all the imported edible oils as a special case.
   
   

 Which of the statements given above is/are correct?

Explanation:

•  According to credit rating agency ICRA, India occupies a prominent position in the world oilseeds industry with contribution of around 10 percent in worldwide production. But the demand of edible oils (extracted from oilseeds in addition to palm oil) is significantly higher than the domestic production, leading to dependence on imports (60% of requirement). So, statement 1 is correct.
  
  
•  As India’s edible oil imports surge, depressing prices of domestically produced mustard, soyabean and other soft oils and in turn cutting returns of farmers and processors, the industry has demanded substantial increase in import duty to curtail imports.
  
  
•  Government imposes customs duty on edible oils to safeguard the interests of domestic oil crushing industry. The duty on two major edible oils, namely crude sunflower seed oil and crude canola/rapeseed/mustard is 25 percent, while crude soyabean oil attracts 30 percent duty. So, statement 2 is not correct.
  
  

Therefore, option (1) is the correct answer.

Subject: Economics | Foreign Trade and Investment