MUMBAI (Dec 31): India has cut import taxes on crude and refined palm oil from Southeast Asian (ASEAN) countries after a request from suppliers, a government notification said on Tuesday.
The reduction will lead to higher imports of palm oil by the world’s biggest edible oil buyer in coming months as it would narrow the difference between the tropical vegetable oil and competitors such as soyoil and sunflower oil.
Higher imports could support Malaysian palm oil prices , which have risen 44% in 2019.
The duty on crude palm oil was lowered to 37.5% from 40%, while a tax on the refined variety was cut to 45% from 50%, the notification said.
The revised lower tax would apply to almost all palm oil imports as India primarily imports palm oil from Indonesia and Malaysia, which are members of the ASEAN group, refiners said.
Imports of refined palm oil are set to jump in the coming months as the duty gap between crude and refined palm oil has narrowed to 7.5% from 10% earlier, said B.V. Mehta, executive director of the Solvent Extractors’ Association (SEA), a Mumbai-based trade body.
“The new duty structure has opened the floodgate for refined palm oil. It is detrimental to local refiners,” Mehta said.
The SEA has requested Indian government to maintain a duty difference between crude and refined palm oil to 10%, he said.
India relies on imports for 70% of its edible oil consumption, up from 44% in 2001/02. Palm oil accounts for nearly two-thirds of India’s edible oil imports of around 15 million tonnes, according to data compiled by SEA.
India’s palm oil imports fell 3% in November from a year ago to the lowest level in 17 months.
Indonesia and Malaysia, the top two palm oil producers, were seeking a reduction in the Indian import tax to cut inventories.
Palm oil competes with soyoil and sunflower oil in Indian markets.
India on Tuesday kept import tax on soyoil and sunflower oil unchanged, which could make imports of palm oil more attractive, said Sandeep Bajoria, chief executive of the Sunvin Group, a Mumbai-based vegetable oil importer.
India imports soyoil mainly from Argentina and Brazil and sunflower oil from Ukraine and Russia.
Source : The Edge Markets