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Oil industry seeks change in fiscal regime for price stability
New Delhi, Nov 24: With prices of petrol and diesel being revised over a dozen times in last one year to keep them in line with dynamic global markets, the oil industry today demanded a change in the fiscal regime to check the impact of excessive volatility on domestic market.
New Delhi, Nov 24: With prices of petrol and
diesel being revised over a dozen times in last one year to
keep them in line with dynamic global markets, the oil
industry today demanded a change in the fiscal regime to check
the impact of excessive volatility on domestic market.
"If you want stability in prices of sensitive petroleum
products like petrol and diesel, a fiscal mechanism of
insulating domestic market from vagaries of international oil
market will have to be developed," Indian Oil Corp chairman
M S Ramachandran said at the World Economic Forum (WEF)
conference here.
India, which is 70 per cent import dependant to meet its crude oil requirement, aligns domestic prices with global oil prices every fortnight.
Ramachandran suggested setting up of an oil stabilisation fund, much on the lines of South Korean model, that compensates oil firms for keeping prices low during high volatilities. Oil companies add to the fund corpus when the prices fall but they don't change domestic prices accordingly.
Alternatively, he suggested, the Malaysian model of a fixed duty regime where import and excise duties change with change in international price so as to keep domestic market unaffected.
In Malaysia, customs and excise duty are cut when global prices rise and they are increased when prices are on decline, thereby leaving domestic prices unchanged.
He said the government should shift to fixed duty regime instead of present ad-valorem system (duties fixed in percentile).
"About 50 per cent of the produce prices are made up of duty and levies," he said.
Bureau Report
India, which is 70 per cent import dependant to meet its crude oil requirement, aligns domestic prices with global oil prices every fortnight.
Ramachandran suggested setting up of an oil stabilisation fund, much on the lines of South Korean model, that compensates oil firms for keeping prices low during high volatilities. Oil companies add to the fund corpus when the prices fall but they don't change domestic prices accordingly.
Alternatively, he suggested, the Malaysian model of a fixed duty regime where import and excise duties change with change in international price so as to keep domestic market unaffected.
In Malaysia, customs and excise duty are cut when global prices rise and they are increased when prices are on decline, thereby leaving domestic prices unchanged.
He said the government should shift to fixed duty regime instead of present ad-valorem system (duties fixed in percentile).
"About 50 per cent of the produce prices are made up of duty and levies," he said.
Bureau Report