India’s increase of import duty on crude edible oil by 20 per cent may impact international market

Indians have decided to increase import duty on crude palm oil, rude soya oil and crude sunflower oil from September 14, by 20 per cent, organisations reported.

The new tariff makes the import duty on the three oils to 27.5 per cent from the existing 5.5 per cent. This step by India has been taken in order to support the Indian farmers to get a suitable price for their oilseed producers. Maharashtra state of India is a centre for oilseed production where provincial elections have been scheduled later this year; and the ruling party in India which has its stake in the elections, has made the changes in the tariff keeping in mind the elections, at the same time aiming to aid farmers get better price for their produces.

India being a big consumer market for crude oil, particularly palm oil, the decision of New Delhi to increase custom duty on palm oil is expected to affect its international price. India meets more than 70% of its vegetable oil demand through imports. Nations that export palm oil to India include Indonesia, Malaysia and Thailand, while exporters of soya oil and sunflower include Argentina, Brazil, Russia and Ukraine.