INDIAN IMPORT DUTY CHANGES TO REDUCE REFINED PALM OIL IMPORTS

In a move to protect its domestic farmers, India doubled the import duty on crude palm oil (CPO) to 15% and raised the tax on refined, bleached and deodorised (RBD) palm olein from 15% to 25%, according to Hellenic Shipping News last month. The move is expected to boost domestic refiners while Indonesian and Malaysian counterparts will likely be hit by the change, as India is the world’s largest palm oil importer. 

Crude products for domestic refining generally rule India’s oil imports, but Indonesia and Malaysia’s increased taxes on crude palm oil exports to promote their own refining industry made refined oil cheaper for Indian importers.  The changes to their tax policy caused refined palm oil to take up 31% of India’s total palm oil import in 2015/2016 marketing year which ended in October 2016,  from a previous year share of only 17.4%.  

Sandeep Bajoria, CEO of Mumbai-based vegetable oil importer Sunvin, said that since the duty change, certain Indian importers had already begun requesting CPO instead of RBD products.  According to Hellenic Shipping News, India had imported 6.74 M tons of CPO and 2.2 M tons of refined palm oil in the first nine months of the current marketing year, which began in November 2016.  Palm oil’s share in India’s total edible oil imports has been on a steady downward spiral due to competition from soya and sunflower oils, dropping to 58% in 2015/2016 from the 80% it held in 2012/2013.  Edible oil importers said the new duty change could increase soya imports further, as the import duty on soya oil is only 17.5%, compared to the 25% on refined palm oil.