(MENAFN- KNN India)
New Delhi, Sep 14 (KNN)
In a significant policy shift aimed at bolstering the domestic agricultural sector, India has raised the basic import tax on crude and refined edible oils by 20 percentage points, the government announced on Friday.
The move comes as the world's largest importer of edible oils seeks to provide relief to farmers struggling with low oilseed prices.
Effective from September 14, a 20 per cent basic customs duty will be levied on crude palm oil, crude soyoil, and crude sunflower oil, according to a government notification.
The decision is expected to push up edible oil prices domestically, likely reducing demand and consequently trimming overseas purchases of these key vegetable oils.
This tariff adjustment marks a major increase in the overall import duty on crude edible oils, which will now rise to 27.5 per cent, up from the previous rate of 5.5 per cent.
This includes additional levies such as the Agriculture Infrastructure and Development Cess and Social Welfare Surcharge. Meanwhile, refined palm oil, refined soyoil, and refined sunflower oil will face a new import duty rate of 35.75 per cent, up from 13.75 per cent.
India's move to increase duties was widely anticipated, with Reuters reporting in late August that the government was contemplating this shift to assist domestic soybean growers ahead of key state elections in Maharashtra.
The decision is expected to benefit farmers by boosting the likelihood of them receiving the minimum support price (MSP) for soybean and rapeseed, set by the government. Currently, domestic soybean prices are approximately Rs 4,600 per 100 kg, below the MSP of Rs 4,892.
Sandeep Bajoria, CEO of Sunvin Group, a leading vegetable oil brokerage, described the move as a long-overdue attempt by the government to strike a balance between consumer interests and the welfare of farmers.
India relies on imports to meet over 70 per cent of its edible oil consumption, purchasing palm oil from Indonesia, Malaysia, and Thailand, and sourcing soyoil and sunflower oil from Argentina, Brazil, Russia, and Ukraine. Palm oil accounts for more than 50 per cent of India's edible oil imports, making it particularly vulnerable to the new tariffs.
With the higher duties in place, analysts predict downward pressure on palm oil prices in the global market, as Indian demand is expected to soften in the coming weeks.
(KNN Bureau)
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