New Delhi: India, the world’s second-biggest vegetable-oil buyer after China, hasn’t taken any decision to cut import duty on edible oils, parliamentary affairs minister Priya Ranjan Dasmunsi said.
“We’ve discussed prices. No specific decision has been taken except on pulses,” Dasmunsi said after a cabinet meeting.
Rural development minister Raghuvansh Prasad Singh had earlier told reporters the cabinet had approved a reduction in import duty on cooking oil. He refused to clarify his remarks after the briefing by Dasmunsi. Singh told reporters at his office that he was not authorized to speak to reporters about cabinet decisions.
The government imposes an import tax of 60% on crude palm oil and 45% on crude soyabean oil. India has twice cut the import levy on edible oils this year to augment supplies following a drop in domestic oil seed output.
India imports palm oil from Malaysia and Indonesia, the world’s biggest producers, and soyabean oil from Argentina and Brazil.
The surge in Malaysian palm oil prices, which have gained as much as 6% just this month to an eight-year high, is forcing Indian importers to hold back on new deals, said Parvez Kader, managing director of Liberty Oil Mills Ltd, one of India’s leading palm oil importers.
Palm oil constitutes more than half of India’s total annual edible oil imports of over five million tonnes (mt), almost half of annual domestic consumption. Importers of palm oil have been pushing for a reduction in import duty.
These traders are bound to be disappointed at the cabinet deferring a decision on duty reduction.
Finance minister Palaniappan Chidambaram said on 11 April that the government was closely watching output of summer-harvested oilseeds and pulses, and if output improves prices might ease.
In January, New Delhi reduced import duties on crude palm oil and palmolein to 60% and those on refined, bleached, and deodorised palm oil to 67.5%. Soya oil carries a customs duty of 45%.
The Centre also removed 4% additional customs duty on all edible oils in the Budget in February, but did not tinker with the basic customs duty on palm oils.
Kader said the landed cost of crude palm oil, which was at $585 (Rs25,155) a tonne in early January, fell to $545 following the duty reductions.
“Prices started going up again and have touched as high as $695 a tonne due to tight supplies in Malaysia and Indonesia. High soya oil prices have also pushed palm oil up,” he said.
But Kader said it was unlikely palm oil prices would rise much further from current levels. “I think the market is starting to peak.”
Kader said although some Indian importers might hesitate signing new deals, others might look to buying soya oil.
“India needs oils and refineries must run. The question is if not palm oil, then some other oil,” Kader said.
An expected drop in domestic oilseeds output to 22.6mt in the year ending October 2007, from 23.9mt a year ago, is also pushing edible oil prices up, analysts say.
Mayank Bhardwaj and Sambit Mohanty of Reuters also contributed to this story.