India has cut base import taxes on palm oil, soyoil and sunflower oil, according to a government notification, as the world's biggest vegetable oil buyer tries to cool near-record price rises.
The reduction in taxes could bring down prices of the edible oils in India and boost consumption, effectively increasing overseas buying by the south Asian country.
The base import tax on crude palm oil has been slashed to 2.5% from 10%, while the tax on crude soyoil and crude sunflower oil has been reduced to 2.5% from 7.5%, the government said in a notification late on Friday. The base import tax on refined grades of palm oil, soyoil and sunflower oil cut to 32.5% from 37.5%.
After the cuts, crude palm oil, soyoil and sunflower oil imports will be subject to a 24.75% tax in total, including a 2.5% base import duty and other taxes, while refined grades of palm oil, soyoil and sunflower oil would carry a 35.75% tax in total.
Edible Oil Demand
India fulfils more than two-thirds of its edible oil demand through imports and has been struggling to contain a rally in local oil prices for the last few months.
The country imports palm oil mainly from top producers Indonesia and Malaysia, while other oils, such as soy and sunflower, come from Argentina, Brazil, Ukraine and Russia.
The reduction in taxes would bring down edible oil prices ahead of key festivals, when edible oil demand rises in the country, said Govindbhai Patel, managing director of trading firm G G Patel & Nikhil Research Company.
New Delhi cut import taxes on palm oil, soyoil and sunflower oil, but kept import duties intact on crude rapeseed oil at 38.5%, said B V Mehta, executive director of the Solvent Extractors' Association of India.
"There is a need to bring down import tax on rapeseed oil as well since the price has nearly doubled in a year," Mehta said.
Last year, India's vegetable oil imports fell 13% upto October, due to sluggish demand from hotels and restaurants which bore the brunt of the coronavirus pandemic.