Domestic soybean prices are hovering around Rs 4,600 ($54.84) per 100 kg, lower than the state-fixed support price of Rs 4,892.
India has raised the basic tax on imports of crude and refined edible oils by 20 percentage points, the government said on Friday, as the world’s largest edible oil importer tries to help protect farmers hit by lower oilseed prices.
The move could raise edible oil prices and reduce demand, thereby reducing external purchases of palm oil, soybean oil and sunflower oil.
Following the announcement of the tariff increase, soybean oil on the Chicago Board of Trade extended its losses and fell by more than 2 percent.
New Delhi on Friday imposed a basic customs duty of 20 per cent on crude palm oil, crude soybean oil and crude sunflower oil with effect from September 14, according to the notification.
It will effectively increase the total import duty on the three oils from 5.5 per cent to 27.5 per cent as they are also subject to India’s Agricultural Development and Infrastructure Levy and Social Welfare Surcharge.
Imports of refined palm oil, refined soybean oil and refined sunflower oil will be subject to an import duty of 35.75 percent, up from the previous duty of 13.75 percent.
Reuters reported in late August that India was considering raising taxes on vegetable oil imports to help soybean farmers ahead of regional elections in Maharashtra later this year.
“After a long time, the government has been trying to balance the interests of both consumers and farmers,” said Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage firm.
The move has increased the likelihood that farmers will receive the government-set minimum support price for their soybean and rapeseed crops, he said.
Domestic soybean prices are hovering around Rs 4,600 ($54.84) per 100 kg, lower than the state-fixed support price of Rs 4,892.
India meets more than 70% of its vegetable oil demand through imports. It buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soybean and sunflower oil from Argentina, Brazil, Russia and Ukraine.
“India’s edible oil imports consist of more than 50 per cent palm oil, so it is obvious that the increase in Indian tariffs will have a negative impact on palm oil prices next week,” said a New Delhi-based dealer with a global trading house.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 14, 2024 | 16:55 IS
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