Duty on CPO lowered to 37.5 percent from 40 percent
Reuters/Mumbai, India India has cut import taxes on crude and refined palm oil from ASEAN countries after a request from suppliers, a government notification said on Tuesday.
The reduction will lead to higher imports of palm oil by the world’s biggest edible oil buyer in coming months as it would narrow the difference between the tropical vegetable oil and competitors such as soy oil and sunflower oil.
Higher imports could support Malaysian palm oil prices, which have risen 44 percent in 2019. The duty on crude palm oil was lowered to 37.5 percent from 40 percent, while a tax on the refined variety was cut to 45 percent from 50 percent, the notification said.
The revised lower tax would apply to almost all palm oil imports as India primarily imports palm oil from Indonesia and Malaysia, which are members of the ASEAN group, refiners said. Imports of refined palm oil are set to jump in the coming months as the duty gap between crude and refined palm oil has narrowed to 7.5 percent from 10 percent earlier, said BV Mehta, executive director of the Solvent Extractors Association (SEA), a Mumbai-based trade body.
“The new duty structure has opened the floodgate for refined palm oil. It is detrimental to local refiners,” Mehta said. The SEA has requested Indian government to maintain a duty difference between crude and refined palm oil to 10 percent, he said.
India relies on imports for 70 percent of its edible oil consumption, up from 44 percent in 2001-2002. Palm oil accounts for nearly two-thirds of India’s edible oil imports of around 15 million tons, according to data compiled by SEA. India’s palm oil imports fell 3 percent in November from a year ago to the lowest level in 17 months.
Indonesia and Malaysia, the top two palm oil producers, were seeking a reduction in the Indian import tax to cut inventories. Palm oil competes with soy oil and sunflower oil in Indian markets.
India on Tuesday kept import tax on soy oil and sunflower oil unchanged, which could make imports of palm oil more attractive, said Sandeep Bajoria, chief executive of the Sunvin Group, a Mumbai-based vegetable oil importer. India imports soy oil mainly from Argentina and Brazil and sunflower oil from Ukraine and Russia.
New Delhi’s palm oil imports in November stood at 671,863 tons, the lowest since July 2018, the SEA said in a statement. The country imported 691,827 tons of palm oil in November 2018 and 778,568 tons in October 2019, it said.
India, the world’s biggest importer of edible oils, buys palm oil mainly from Indonesia and Malaysia. Indian refiners nearly stopped palm oil purchases for November shipments from Malaysia in October fearing New Delhi could raise import taxes or enforce other measures to curb imports after Kuala Lumpur criticized New Delhi for its actions in Kashmir.
India’s government was angered after Malaysian Prime Minister Mahathir Mohamad said at the United Nations that India had “invaded and occupied” Jammu and Kashmir and asked New Delhi to work with Pakistan to resolve the issue. India’s government has not made any public remarks about imports of palm oil from Malaysia.
“The dispute has been going on for a month but still India hasn’t come out with concrete measures. Some traders have started taking risks, assuming it may not impose a duty on Malaysian palm oil,” said a Mumbai-based importer, Reuters reported in November.
Source: The Jakarta Post