Luke MUMBAI, Sep 13 – The Indian government on Friday said it has raised the basic import duty on crude and refined edible oils by 20 per cent, as the world’s biggest food oil importer seeks to help farmers cope with low oilseed prices.
The move could raise edible oil prices and lower demand, thereby reducing foreign purchases of palm oil, soybean oil and sunflower oil.
After the tax hike was announced, soybean oil extended its losses, with prices falling more than 2% on the Chicago Board of Trade.
New Delhi on Friday imposed a 20% basic tariff on crude palm oil, crude soybean oil and crude sunflower oil with effect from September 14, the notice said.
This will increase the total import duty on the three oils from 5.5% to 27.5% as these oils will also be subject to the Indian Agriculture Infrastructure and Development Tax and Social Welfare Surcharge.
The import duty for refined palm oil, refined soybean oil and refined sunflower oil is now 35.75%, up from 13.75% earlier.
Askume reported in late August that IndiaA hike in import duty on vegetable oil is being considered to help soybean growers ahead of regional elections in the state of Maharashtra later this year.
“For a long time, the government has been trying to balance the interests of consumers and farmers,” said Sandeep Bajoria, chief executive of vegetable oil brokerage Sunvin Group.
He said the measure increases farmers’ access to the government’s minimum support price for soybean and rapeseed crops.
Domestic soybean prices are around Rs 4,600 ($54.84) per 100 kg, lower than the state-set support price of Rs 4,892.
More than 70% of India’s vegetable oil demand is met through imports. Palm oil is mainly procured from Indonesia, Malaysia and Thailand, while soybean oil and sunflower oil are imported from Argentina, Brazil, Russia and Ukraine.
“More than 50% of India’s edible oil imports consist of palm oil, so it is clear that the increase in Indian tariffs will have a negative impact on palm oil prices next week,” said a New Delhi-based dealer with a global trading company.
(1 USD = 83.8800 Indian Rupees)
