India is considering reducing import duties on edible oils after cooking oil prices hit record highs last month, to reduce food costs in the world’s biggest vegetable oil importer.
While any final decision is yet to be made, the tax reduction could lower local prices and boost consumption, giving support to Malaysian palm oil, along with soy and sunflower oil prices, and dampening prices of local oilseeds such as rapeseed, soybean and groundnut. The government will make a final decision to cut the taxes sometime this month.
Domestic soyoil and palm oil prices have more than doubled in the past year, hitting consumers already stung by record fuel prices and reduced incomes amid the COVID-19 pandemic.
India meets nearly two-thirds of its edible oil demand through imports, levying a 32.5 per cent duty on palm oil imports, while crude soybean and soyoil are taxed at 35 per cent.
It buys palm oil from Indonesia and Malaysia, and soyoil and sunflower oil come from Argentina, Brazil, Ukraine and Russia.
However, some in the industry are opposed to cutting import duties because that may only help overseas suppliers and discourage farmers from expanding oilseed acreage. The government’s tax collection however, would remain the same as last year since prices have gone up in the world market.
The average landed price of crude palm oil at Indian ports was $1,173 per tonne in April 2021 compared to $599 a year ago, according to data from the Solvent Extractors’ Association of India (SEA), a trade body.
During a meeting with government officials last week on reducing edible oil prices, the SEA suggested using the taxes to subsidise sales to consumers. “The government can help poor people even without cutting import tax by providing subsidisededible oils,” B.V. Mehta chairman of Solvent Extractors Association (SEA) said.