New Delhi/Mumbai: India, the world’s second-biggest vegetable oil buyer, reduced import duty on edible oils for the third time this year to boost supplies and slow inflation.
Import tax on crude palm oil was reduced to 50% from 60%, while duty on refined bleached and deodorized palm oil was cut to 57.5% from 67.5%, Hema Ambika Priya, a spokeswoman at the Central Board of Excise and Customs in the finance ministry, said in New Delhi on Friday.
Lower Indian import taxes bolstered gains in palm oil prices in Malaysia and soyabean oil in Chicago. Palm oil futures reached a more-than- eight-year high on Friday and soyabean oil has climbed 45% in the past year.
Prime Minister Manmohan Singh’s Congress party, which lost elections to Punjab and Uttarakhand in February, wants to stem an increase in prices of food staples to win voters in the state of Uttar Pradesh which is poll-bound. This will set the tone for the Lok Sabha elections coming up in two years.
Cooking-oil imports may exceed five million tonnes (mt) in the year ending October from 4.4mt last year because of a drop in output of oilseeds, according to the Solvent Extractor’s Association of India (SEAI), a trade body.
Production of oilseeds may decline 16% to 23.62mt in the year ending 30 June from a year ago, the government said on 6 February.
India imports palm oil from Malaysia and Indonesia, the world’s biggest producers of the tropical oil, and soyabean oil from Argentina and Brazil.
India imported 21% less edible oils in March because of higher domestic supply and speculation of a cut in import taxes slowed fresh purchases.
Purchases fell to 317,930 tonnes from 401,213 tonnes in the year-ago month, SEAI said.
Purchases may pick up next month as the harvesting season comes to an end, B.V. Mehta, SEAI’s executive director, said. “Imports are bound to rise sharply from May as there will be no seeds available locally for crushing,” he said.
Buyers had deferred shipments to March on expectations that the government may cut import duties to augment domestic supplies of the commodity. Imports in March included 211,928 tonnes of crude palm oil, up 5% from a year ago, and 55,452 tonnes of soyabean oil, down 67% from a year earlier, SEAI said.
Sunflower oil imports in March jumped to 41,371 tonnes from 3,000 a year earlier after the government cut import tax to 50% from 65% on 28 February. The government also removed a special levy of 4% on cooking oils.
Bloomberg’s Sam Nagarajan contributed to this story