04/12/2017 – News / India / Edible oils
India hikes import tax on edible oils to highest in a decade
In an effort to support domestic farmers, the Indian government has doubled the import tax on crude palm oil to 30 per cent, while the duty on refined palm oil has been increased to 40 per cent from 25 per cent. The levy on crude soy oil was raised to 30 per cent from 17.5 per cent, while on refined soy oil it was raised to 35 per cent from 20 per cent, according to the government order. It also raised import duty on soybeans, canola oil and sunflower oil.
Oilseed crushers in India have been struggling to compete with cheap imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soybeans – even after a steep fall in oilseed prices. The latest duty increase will lift oilseed prices and their availability for crushing in the domestic market, helping the country in capping edible oil imports in the 2017/18 marketing year, which commenced on 1st November.
Huge domestic demand
India is the world’s biggest importer of edible oils today, relying on imports for 70 per cent of its edible oil consumption – up from 44 per cent in 2001/02. Even after the duty increase, India will need to import about 15.5 million tonnes of edible oils in 2017/18 – down from an earlier estimate of 15.9 million tonnes, but higher than last year’s 15 million tonnes, said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil importer. “The duty hike will have marginal impact on imports. India has to import due to huge demand,” Mr Bajoria said.
The second increase in import tax in less than three months will push up domestic edible oil prices and support prices of local oilseeds like soybean and rapeseed, said B.V. Mehta, Executive Director of the Solvent Extractors’ Association (SEA) – a Mumbai-based trade body. Soybean and rapeseed have been trading below the government-set price level in the physical market, angering farmers.
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