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India government considers raising import taxes on vegetable oils

28 Oct 2014 Evaluate

In order to protect local farmers and the refining industry, India is considering raising the import taxes on crude and refined vegetable oils as purchases by the world's top importer are expected hit a record this year.

The government could increase duties on both the oils by more than 5 percentage points. India currently levies a 2.5 percent tax on crude vegetable oils and 10 percent on the refined variety. The final decision on the duty hikes will be taken by the Finance Ministry.

Hit by cheaper vegetable oil imports from top producers Malaysia and Indonesia, industry body the Solvent Extractors Association of India (SEA) has petitioned the government to raise the duty on crude vegetable oils to 10 percent and 25 percent on refined products. India is likely to import a record 13 million tonnes of edible oils in the new year beginning November, up from an estimated 11.6 million tonnes this year, including 8 million tonnes of palm oil.

The lower food price inflation in India and higher vegetable oils stocks in Malaysia and Indonesia will make it easier for the government to raise import duties, protecting farmers without creating an excessively heavy burden for consumers.

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