MUMBAI: India on Tuesday cut the base import tax on crude palm oil to 10% from 15% for three months, the government said in a statement, as the world's biggest vegetable oil buyer tries to dampen near record high prices.
The tax cut could make palm oil more attractive than rival soyoil and sunflower oil for Indian refiners and boost imports of the tropical oil in the next three months, supporting benchmark Malaysian prices.
The lower tax rate will apply from June 30 to September 30, the government said.
The duty cut would provide a necessary respite to consumers from the high edible oil prices, said Sudhakar Desai, president of the Indian Vegetable Oil Producers' Association (IVPA).
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, which imports palm oil mainly from Malaysia and Indonesia, could buy 500, 000 tonnes of additional palm oil in these three months and average monthly imports could be around 850, 000 tonnes, Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil broker, said.
After the tax reduction, palm oil imports will be subject to a 30.25% tax in total, including 10% base import duty and other taxes.
The overall tax rate on palm oil imports was previously 35.75%.
Palm oil is the most widely used and imported oil in India, but is mainly for bulk buyers such as food processors and for use in restaurants. Households usually prefer soyoil, sunflower oil and rapeseed oil.
The government has cut the duty on palm oil but kept the duty structure intact for soyoil and sunflower oil, effectively making palm oil more attractive than its rival oils, a Mumbai-based trader with a global trading firm said.- Reuters