India Raises Import Duty on Palm Oil as Indonesia Keeps WaiverPratik Parija and Prabhudatta Mishra
India, the world’s biggest buyer of palm oil, raised import duties on crude and refined varieties in a move to protect farmers from declining oilseed prices.
The tax on crude palm oil was raised to 7.5 percent from 2.5 percent, while the duty on refined grades was increased to 15 percent from 10 percent, the Central Board of Excise & Customs said on its website in a notice dated Dec. 24.
The increase may counter the benefits shippers were expecting to gain from the scrapping of export taxes by Indonesia and Malaysia, which account for about 86 percent of world supply. Indonesia extended today its zero duty for a fourth month to January, while Malaysia has already prolonged its duty exemption through February. Both countries are seeking to cut reserves in a year of unprecedented oilseed supply.
“The duty difference will help value addition” in India, B.V. Mehta, executive director of the Solvent Extractors’ Association, said by phone. “Rising imports are hurting domestic farmers as they’re not getting remunerative prices.”
Palm imports rose for a fifth month in November from a year earlier, the association said Dec. 12. Purchases in the year started Nov. 1 may rise 13 percent to 8.75 million tons, Dorab Mistry, director at Godrej International Ltd., said last month.
Futures in Kuala Lumpur entered a bull market last month after the tax cuts by Malaysia and Indonesia and traded at 2,239 ringgit ($641) a ton today, rising 17 percent from a five-year low on Sept. 2. In India, the price of soybeans has fallen 16 percent from a year earlier to 31,800 rupees a ton, Mehta said. Imports of soybean oil rose to 121,097 tons in November from 14,980 tons 12 months ago, the association says.
Inventories in Malaysia expanded for a fifth month in November to the highest level since February 2013, the palm oil board said on Dec. 10. In Indonesia, stockpiles probably rose 7.1 percent to 2.25 million tons in November from a month earlier, a Bloomberg survey showed.