UPSC Prelims 2018 Q10: Indian Economy – Agriculture & Rural Development
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (a) 1 only
Explanation
India's Edible Oil Economy
| Statement | Claim | Verdict | Detail |
|---|---|---|---|
| 1 | Imported edible oils exceed domestic production in the last 5 years | TRUE | India is the world's largest importer of edible oils. Domestic production covers only about 35-40% of consumption; the remaining 60-65% is imported (palm oil from Indonesia/Malaysia; soybean oil from Argentina/Brazil; sunflower from Ukraine/Russia). |
| 2 | Government imposes NO customs duty on any imported edible oil | FALSE | India imposes basic customs duty + AIDC (Agriculture Infrastructure Development Cess) + Social Welfare Surcharge on imported edible oils. Duties are periodically revised (e.g., crude palm oil, refined palm olein, soyabean oil, sunflower oil all attract varying duties to balance farmer interests with consumer inflation). |
Answer: (a) 1 only.
Why each option is right or wrong
- (a) CORRECT. Only Statement 1 is right - imports do exceed domestic edible oil production in India.
- (b) Incorrect. Statement 2 is factually wrong - edible oil imports do attract customs duties (basic duty, AIDC, cess).
- (c) Incorrect. Statement 2 misstates the duty regime.
- (d) Incorrect. Statement 1 is a well-known feature of India's edible oil market.
Key point
India's oil import dependence: ~60-65% of edible oil consumption is imported. Largest sources: palm oil (Indonesia/Malaysia), soybean (Argentina/Brazil), sunflower (Ukraine/Russia). Government uses duty modulation to balance farm-consumer interests.
Remember
India imports about 60-65% of the edible oil it consumes, making imports far larger than domestic production in every recent year. Contrary to the claim in Statement 2, imported edible oils do attract customs duties (basic customs duty plus cesses), which the government periodically calibrates to balance farmer support with consumer price stability.
Common mistakes
- Assuming India is self-sufficient in edible oils like it is in wheat and rice - the country is chronically import-dependent.
- Believing customs duties on essential food items are waived - duties are calibrated but rarely zero.
- Ignoring the National Mission on Edible Oils - Oil Palm (NMEO-OP, 2021) launched precisely to reduce this import dependence.
Exam tip
Import-dependence rule: For any commodity where India's demand outstrips supply (edible oils, pulses earlier, crude oil), expect the answer to say 'imports > domestic production'. Duty is a tool, not a waiver.
Sources
- Department of Food and Public Distribution - Annual Report on Edible Oils
- Ministry of Agriculture - National Mission on Edible Oils - Oil Palm (NMEO-OP), 2021