Consumer rights directorate writes to commerce for stopping oil smuggling

The Directorate of National Consumer Rights Protection in a letter has urged the commerce ministry to take measures with the help of the home ministry to plug edible oil smuggling into India.

There are allegations from different trade bodies and media reports that cooking oil is now being smuggled into the neighbouring country for higher prices. 

"We have received allegations of oil smuggling. But we have no wings to work on stopping it. So, we have sent a letter to the commerce ministry for immediate action," Monjur Mohammad Shahriar, director at the consumers' right protection directorate, told The Business Standard.

According to the Department of Consumer Affairs (Price Monitoring Cell) of India, on 16 March, the average price of a litre of bottled soybean oil was Rs162 – equivalent to Tk183.

Besides, a report in the Indian newspaper Financial Express said edible oil, including soybean, palm, and sunflower oil, is being sold in India for between Rs170 and Rs180 per litre, equivalent to Tk192-Tk204.

On the other hand, in Bangladesh, loose soybean oil is now being sold at Tk143 per litre, bottled one at Tk168 per litre, palm oil at Tk133 per litre. A litre of bottled soybean oil here costs at least Tk24 lower than in India.

The people involved in oil trade alleged that to gain more bucks, a section of unscrupulous traders are smuggling cooking oil out of the country, especially through the eastern border, cashing in on a lower price in the domestic market.

The cooking oil prices that the government has set are lower than in the neighbouring countries to give consumers some relief from cost burden amid soaring prices of daily commodities in the global market, according to the letter. 

The directorate has not mentioned who are engaged in oil smuggling – wholesalers or refiners. But it requested the commerce ministry to send a letter to the home ministry to prevent the smuggling of edible oil from Bangladesh to neighbouring countries.

In the meantime, the government has already cut value added tax (VAT) on imports of edible oil to 5% from 15% and withdrawn a 15% VAT on production stage and 5% on consumer level to give some relief to consumers.

But keeping oil prices within the purchasing power of consumers, on the one hand, and preventing smuggling, on the other, has become a major challenge.

Speaking on condition of anonymity, a commerce ministry official told TBS, "If there is shortage of oil supply in the market after the waiver, end consumers will continue to suffer."

"So, preventing trafficking is now a challenge too," he added. 

Palash Mahmud, founder and executive director of Conscious Consumers Society and Consumer Youth Bangladesh, said, "The efforts to rein in edible oil prices through the VAT waiver will fall flat if smuggling is not stopped."

For this, the law enforcement agencies have to take immediate action, he noted.

According to the commerce ministry, the country's annual demand for soybean and palm oil is 18 lakh tonnes, which is met through imports.