India considers raising import duty on palm oil to support local farmers.

India considers raising import duty on palm oil to support local farmers.

India is considering raising its import duty on palm oil to support local farmers who have been hit hard by a fall in domestic rapeseed prices. The world’s biggest importer of vegetable oils is looking at increasing the tax on palm oil to lift local prices and make it less competitive than rival soy oil and sunflower oil.

The move comes as the government tries to protect farmers from falling commodity prices that have dropped below the minimum support price (MSP).


According to government and industry officials, rapeseed supplies from the new season have put pressure on prices, with spot markets showing prices around 5,000 Indian rupees ($61.21) per 100 kg, below the government-fixed price of 5,450 rupees per 100 kg. Indian farmers plant rapeseed, the main winter-sown oilseed, in October and November, with harvests from March.


Last year, India abolished the basic import tax on crude palm oil (CPO) but continued with a 5.5% tax on CPO shipments. The country also levies a 12.5% import tax on refined, bleached and deodorized palm oil. Since world prices have dropped, India is looking at raising the duty to support local farmers.


The fall in rapeseed prices has hurt farmers from India’s western state of Rajasthan, which accounts for more than half of the rapeseed production. Trade and industry officials say the government wants to protect growers ahead of the state election. An inter-ministerial panel is looking into the proposal to raise the duty, according to sources who declined to be named citing official rules.


Overall, food inflation might be a concern for the government, but vegetable oil prices have dropped. The increase in the import duty on palm oil is expected to help lift local prices, making it less competitive than other oils, and provide support to struggling farmers.

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