Monday, 31 March, 2008

Import duty on food items likely to be scrapped

It has been a nervous day throughout ahead of cabinet meeting in the evening and there are likely import cuts and export bans going to be happening to the market today. We have seen a slide across the board be it edible oils or pulses, or steel or sugar for that matter. Everything has gone down in the markets today between 1-5% during the day.

Import duty on many food items could be scrapped today and for edible oils this would be second duty cut in last 10 days. We have already seen duty cuts in crude, refined palm, sunflower, and mustard - all of them. Domestic oil prices have gained by 40% in past one year and government has been trying to control inflation through all these things. Export ban on edible oil has already been done, we have already seen duty cuts happening from 75 to 50% to 20% on the lower side and as per market expectations this could happen to nil in the evening cabinet meeting today in the markets.

There has also been decline in other commodities like wheat, pulses, sugar etc, there has been talk about scrapping export subsidy on sugar and that also has led to decline in the prices there. The day started firm for most of these commodities but we have seen profit taking happen here especially in case of edible oil the knee jerk reaction is expected to be quite strong and one might see correction happening between 3-6% as soon as the markets open tomorrow after that cabinet meeting.