Indian government may raise vegoil import duty third time since Aug 2017

18.01.2018

The Indian government may raise the import duty on vegetable oils such as refined palm oil and palm olein, sunflower oil and cottonseed oil for the third time since August 2017, amid lobbying by the country's refiners and to protect local farmers, an Indian industry source said Thursday.

This move could come ahead of key state and general elections due to be held in 2018 and 2019, to attract farmers' votes, the source said.

The government had raised import duties in August 2017 and again in November in the wake of intense lobbying by the Indian refiners, and in order to cater to farmers' requests ahead of a key state election in Gujarat, industry sources in India said.

The higher import duties in November, which were raised to 30%-40% on refined oils like palm and soybean, increased the share of domestic oils purchased by refiners as imported oils from Southeast Asia and South America became more expensive, sources said, giving a boost to domestic farmers.

Indian refiners benefited from the increase in import duties because they were able to sell inventory at higher prices domestically, soon after each import duty hike was announced, sources added.

After the duty increases, palm oil exports from Malaysia into India have fallen. In August and September last year, India imported 183,286 mt and 189,290 mt of palm oil, respectively, from Malaysia, according to data from the Malaysian Palm Oil Board.

However, after the November increase in Indian import duty, November imports of CPO into India fell to 100,161 mt while December imports were at 107,122 mt, according to MPOB data.


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