MUMBAI: India on Wednesday slashed various import taxes on palm oil, soyoil and sunflower oil ahead of key festivals as the world's biggest vegetable oil buyer tries to cool near-record price rises.
The tax cuts could bring down local edible oil prices and spur demand and imports, potentially supporting global palm oil , soyoil and sunflower oil prices.
The south Asian country slashed its base import tax on crude palm oil, crude soyoil and crude sunflower oil to zero from 2.5%, the government said in a notification.
New Delhi also cut the basic import tax on refined palm oil, refined soyoil and refined sunflower oil to 17.5% from 32.5% earlier, it said.
India also reduced Agriculture Infrastructure and Development Cess (AIDC) - another tax - on crude palm oil imports to 7.5% from 20%, while AIDC on crude soyoil and crude sunflower oil was reduced to 5% from 20%, the government said in a separate notification.
After the cuts, crude palm oil will be subject to a 8.25% tax in total compared to 24.75% earlier, B.V. Mehta, executive director of Mumbai-based Solvent Extractors' Association of India (SEA) said.
"Import duty on CPO has gone down by 16.5% but Indian consumers won't get the entire benefit of the duty reduction. Indonesian and Malaysian supplier are likely to raise prices responding to the duty cut," he said.
Effective duty on crude soyoil and crude sunflower oil has fallen to 5.5% from 24.75%, while refined palm oil, refined soyoil and refined sunflower oil face a 19.25% import tax against 35.75% earlier, the SEA said in a statement.
India fulfils more than two-thirds of its edible oil demand through imports and has been struggling to contain a rally in local oil prices for the last few months.
The country imports palm oil mainly from top producers Indonesia and Malaysia, while other oils, such as soy and sunflower, come from Argentina, Brazil, Ukraine and Russia.
"Duty cut would bring down local edible oil prices but could hurt local oilseed farmers since harvesting of soybean and groundnut has started," Mehta said.
Local soyoil, soybean and palm oil futures fell by as much as 6% after the duty cut announcement.