New Delhi:India, the world’s third-biggest importer of vegetable oils, may cut import duties on palm products to fight rising inflation after the government cut other custom duties, industry officials said on Tuesday.
Representatives of the palm oil industry met food ministry officials to discuss a cut in import duties and the possible impact on domestic prices of oils.
“It was only a review meeting. Government is under pressure because of inflation,” B V Mehta, executive director of the Solvent Extractors Association of India, told reporters after the meeting.
Food ministry officials described the meeting as routine.
“We had solicited the industry’s views, it was a routine interaction,” Food Secretary T. Nand Kumar told reporters.
Annual inflation hit a two-year high of 6.12 percent on Jan. 6, data last week showed, adding to expectations the Reserve Bank of India will raise interest rates at a Jan. 31 policy review.
Govindhbhai Patel, an edible-oil trader from the western state of Gujarat, said duties on palm products might be cut by about 10 percent but it may not have much effect on inflation.
Palm oil constitutes more than 50 percent of India’s total annual edible imports of over 5 million tonnes.
Oils imports at this time of year were not high due to good domestic stocks, Patel said, adding that imports over the past three months were only about 100,000 tonnes more than for the same period a year ago.
Traders said any cut at this time would hurt farmers by making import prices more competitive.
In August, the government cut import duties on crude palm oil and palmolein shipments to 70 percent from 80 percent, and those on RBD palm oil and palmolein were cut to 80 percent from 90 percent. In December, the cuts were extended indefinitely.
Patel said by not revising the tariff since August, the government had indirectly effected a 20 percent import duty cut on palm products and a 12 percent cut on soy oils.
It was hoped cheaper palm oil would lead to lower soyoil prices as they compete for the same market. Soyoil imports have been growing as, under World Trade Organisation rules, it carries a lower customs duty of 45 percent.