India’s purchases of refined cooking oils may decline after the government increased a tax on imports to guard domestic refiners and oilseed farmers from a surge in shipments of processed palm oil from Indonesia and Malaysia.
Imports of crude palm oil may climb in the coming months as the share of refined oils decline because of the higher tax, said Govindlal G. Patel, managing partner at G.G. Patel & Nikhil Research Co., a cooking oils trader.
The cabinet yesterday approved increasing the tax to 10 percent from 7.5 percent after refined oil imports surged 172 percent in November, hurting domestic refiners and oilseed growers. The average capacity utilization of refiners has dropped to 30 percent from more than 50 percent a year earlier because of the surge in refined oil imports, according to the Solvent Extractors’ Association of India.
“Whatever decline, if any, in refined oils imports will be taken by crude oils as the refining capacities in India are very large,” said Atul Chaturvedi, chief executive of Adani Wilmar Ltd., the nation’s second-biggest refiner.
The country meets more than half of its cooking oil demand through imports, buying palm from Indonesia and Malaysia and soybean oil from the U.S., Brazil and Argentina. The share of refined oils in imports jumped to 21 percent in the 12 months ended October from 16 percent a year earlier, according to the extractors’ association. Total cooking oil purchases were 10.4 million metric tons in 2012-2013, association data show.
Refined products imports surged to 208,076 tons in November from a year earlier while crude varieties jumped 20 percent to 719,035 tons, according to the association. Shipments may increase 5.8 percent to 11 million tons in the year that began on Nov. 1 from a year earlier, Adani’s Chaturvedi said.