MUMBAI: India on Wednesday allowed imports of refined palm oil for six months, the government said in a notification, as the world’s biggest vegetable oil buyer tries to bring down edible oil prices.
The move could reduce India’s crude palm oil (CPO) imports with buyers shifting to refined palm oil as exporting countries such as Indonesia levy higher taxes on CPO shipments than refined palm oil.
The Indian Ministry of Commerce and Industry issued a notification on Wednesday declaring that the import of refined palm oil “is amended from ‘Restricted’ to ‘Free.’” The South Asian country had restricted imports of refined palm oil in January 2020 to support local refiners and oilseed farmers.
“Today’s decision has opened the floodgates. It will hurt local refiners,” Atul Chaturvedi, president of trade body the Solvent Extractors Association of India (SEA), told Reuters. The decision would help Indonesian and Malaysian refiners more than Indian consumers, he said.
The country also late on Tuesday cut the import tax on refined palm oil to 41.25% from 49.5% for three months to bring down local edible oil prices.
Domestic soyoil and palm oil prices have more than doubled in the past year, hitting consumers already stung by record fuel prices and reduced incomes amid the COVID-19 pandemic. Refined palm oil could corner around 200,000 tonnes in monthly palm oil imports of around 700,000 tonnes in coming months, Chaturvedi said.
India fulfills more than two-thirds of edible oil demand through imports, and palm oil accounts for more than 60% of the total imports.
Indian refiners, which import palm oil mainly from Indonesia and Malaysia, may struggle to compete with cheaper imported supplies, especially from Indonesia, said Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA). Indonesia, the world’s biggest palm oil exporter, charges lower tax on refined palm oil exports than CPO.