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NEW DELHI: India, the world’s largest buyer of palm oil, has lowered its tax on the raw variety of tropical oil to protect local consumers from a surge in world prices.
The tariff on crude palm oil was reduced to 27.5% from 37.5%, the finance ministry said in a notification. The reduction is effective as of today.
Palm oil purchases by India, which imports more than two-thirds of its edible oil needs, rose to a three-month high last month. The lower tax is expected to further boost inbound shipments and support benchmark prices for the product, which is used in everything from cooking oil to shampoo.
Palm oil futures in Malaysia are up 66% from the year’s low in May amid strong demand from India and China. The tax measure is expected to help Indonesia and Malaysia, the world’s largest producers.
Malaysia’s commodity exports plunged almost 19% from the previous month to 1.15 million tonnes from November 1 to 25, according to cargo inspector AmSpec Agri.
However, lower tariffs may affect domestic farmers, who are currently planting winter crops, said BV Mehta, executive director of the Solvent Extractors Association of India.
“The government has made the decision from the consumer’s point of view. It would have been better if they had also cut tariffs on other oils, ”he said.
Oilseed production sown during India’s monsoon is forecast to increase 15% from the previous year to 25.73 million tonnes in 2020-21, according to the Ministry of Agriculture. Soybean production is expected to increase to 13.58 million tonnes from 11.22 million tonnes, it added.
