India has cut base import taxes on crude and refined soyoil and sunflower oil to 7.5% from 15% for six weeks, a government order showed, as the world's biggest vegetable oil buyer tries to cool near record high prices.
The tax reduction could increase imports of soyoil and sunflower oil in September, although a big jump is unlikely as the lower duty is only applicable for a short period until 30 September, industry officials said.
"Logistically it is not feasible to sign contracts now and ensure vessels are unloaded at Indian ports before September end," Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil broker, said.
India buys soyoil and sunflower oil mainly from Argentina, Brazil, Ukraine and Russia.
Refiners might divert two to three vessels heading to other destinations such as China towards India to in cash lower duty, said Bajoria.
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. It had cut import tax on crude palm oil on 29 June.
"Import tax on soyoil and sunflower oil was higher than palm oil. With this duty cut, there is parity on the import tax front now," said BV Mehta, executive director of the Solvent Extractors Association of India.
After the tax reduction, soyoil and sunflower oil imports will be subject to a 30.25% tax in total, including 7.5% base import duty and other taxes.
The government may restore higher duty structure from October, when supplies of summer-sown oilseeds would start, said a Mumbai-based dealer with a global trading firm.
"Soybean and ground nut supplies would start from October. Government will try to ensure farmers will receive higher prices," the dealer 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.