India, the world’s third-biggest importer of vegetable oils, may cut import duties on palm products to fight rising inflation after the government cut other custom duties, industry officials said on Tuesday.A friend and I were discussing on what should be the right response for moves such as this.
Representatives of the palm oil industry met food ministry officials to discuss a cut in import duties and the possible impact on domestic prices of oils.
“It was only a review meeting. Government is under pressure because of inflation,” B V Mehta, executive director of the Solvent Extractors Association of India, told reporters after the meeting.
Shouldn't we welcome them? After all, lowering of import duties make markets freer.
But the answer really is 'no, we shouldnt'. The issue here is not the import duty cut, but government's attempt to control prices. It's of course better than banning exports (which would have a similar effect on domestic supply and hence on prices).
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