Jan. 24 (Bloomberg) -- India, the biggest palm oil buyer, almost doubled the taxable prices of crude cooking oil imports to shield domestic oilseed growers from cheap overseas supplies.
The benchmark price of crude palm oil was raised to $802 a metric ton from $447, while that of crude soybean oil was increased to $1,190 from $580, the Central Board of Excise and Customs said on its website. The rates, on which a 2.5 percent tax is applicable, will now be revised every fortnight, the Agriculture Ministry said on Jan. 17. The customs also notified today the increase in import duty to 2.5 percent from zero.
Higher taxes may lower Indian imports of crude palm oil and boost inventories in Indonesia and Malaysia, the world’s biggest producers, and pressure prices in Kuala Lumpur. Reserves in Malaysia jumped to an all-time high of 2.63 million tons in December, according to the nation’s palm oil board. Malaysia will maintain a zero tariff on crude palm oil shipments, implemented from the start of this month, into February to draw down the stockpiles.
India may import more of refined cooking oils after the tax increase, B.V. Mehta, executive director of the Solvent Extractors’ Association of India, said by phone. “The government should keep enough gap between the crude and refined oils duty so that the local industry has a margin to refine.”
India left the import duty on refined cooking oils unchanged at 7.5 percent last week.
Palm oil represents almost 80 percent of India’s cooking oil imports. Purchases were a record 10.2 million tons in 2011-2012, according to the the Solvent Extractors’ Association of India. The country buys palm from Indonesia and Malaysia and soybean oil from Brazil and Argentina. The government scrapped the tax on crude palm oil in April 2008 to rein in inflation.
--Editors: Thomas Kutty Abraham, Jake Lloyd-Smith