New Delhi: The Centre has cut tax on imports of crude palm oil (CPO) to 5 per cent from the current 7.5 per cent.
India, the world’s biggest edible oil importer, tries to rein in local prices of the commodity, and help domestic refiners and consumers, the central government has said this in a notification.
According to a report in Reuters, industry representatives said that the reduction in the tax, also known as the agriculture infrastructure and development cess (AIDC), will widen the gap between the CPO and refined palm oil import duties, effectively making it cheaper for Indian refiners to import CPO.
The tax cut came into effect on February 13.
B V Mehta, executive director of Mumbai-based Solvent Extractors’ Association of India (SEA), said, “After the reduction in AIDC, the import tax difference between CPO and refined palm oil would widen to 8.25 per cent. This will help Indian refiners, but government needs to increase the difference further to 11 per cent to encourage local refining.”
The Centre in the past few months had tried to rein in domestic prices by reducing import taxes, imposing stockpile limits, and suspending futures trading in edible oils and oilseeds.
In another notification, the government also said it would extend a reduction in a separate, basic customs duty on edible oils until September 30. The tax reduction had been due to expire on March 31.
The country imports more than two-thirds of its edible oil needs and has been struggling to contain a rally in local oil prices over the last few months.
India imports palm oil mainly from top producers Indonesia and Malaysia, while soy and sunflower oil, come from Argentina, Brazil, Ukraine, and Russia.
Refiners have been asking the government to change the import duty structure as the overseas buying of refined palm oil was cheaper than CPO because of higher taxes imposed by producing countries on exports of CPO.