NEW DELHI (Reuters) – India could soon cut an import tax on crude soyoil and crude sunflower oil, trade and government sources said on Tuesday, as the world’s biggest vegetable oil importer tries to keep a lid on local prices.
The reduction in the duty, known as the Agriculture Infrastructure and Development Cess (AIDC), could bring down domestic prices and help consumers and domestic refiners cushion the blow from surging food costs.
The government could either cut or axe the 5% AIDC, said the sources who did not wish to be named as they are not authorised to talk to the media.
The government should also consider cutting the 5% AIDC on crude palm oil to help the local refining industry, said B.V. Mehta, executive director of the Solvent Extractors’ Association of India.
India has already abolished the basic import tax on crude palm oil, crude soyoil and crude sunflower oil, but continues with the 5% AIDC on these three grades of edible oils.
New Delhi has been struggling to contain a rally in local edible oil rates in recent months, and Russia’s invasion of Ukraine has made it even more difficult for the government to tame vegetable oil prices.
India imports more than two-thirds of its edible oil needs and a sharp drop in the supplies of sunflower from the Black Sea region has further stoked local prices.
After retail and wholesale inflation hit multi-year highs in April, the government of Prime Minister Narendra Modi on Saturday announced a series of changes to the tax structure levied on crucial commodities to insulate consumers from rising prices.
India imports palm oil mainly from Indonesia and Malaysia, while other oils, such as soy and sunflower, come from Argentina, Brazil, Ukraine and Russia.
India’s palm oil imports in June are unlikely to spike despite Indonesia’s decision to lift its ban on overseas shipments.
(Reporting by Rajendra Jadhav and Mayank Bhardwaj; Editing by Susan Fenton)
