India increased import duties on refined edible oils, including palm oil, to 10 percent from 7.5 percent to protect local oilseed growers and refiners against cheaper supplies from major exporters.
The decision could shift demand in India, the world's leading importer of vegetable oils, to crude palm oil (CPO), benefiting Malaysian exporters as the country charges a lower duty on overseas CPO sales than rival producer Indonesia.
The duty on imports of crude edible oil was left unchanged at 2.5 percent, Food Minister K.V. Thomas said."The duty difference between crude and refined edible oils has been raised," Thomas told Reuters after a cabinet meeting.India mainly buys palm oil from the world' top two exporters of the tropical oil, Indonesia and Malaysia, and a small quantity of soyoil from Brazil and Argentina.
India's refined palm oil imports surged 40.5 percent to 2.2 million tonnes in the year to October 2013 as Indonesia structured taxes to favour exports of refined products over crude to support its refining industry.
The Indian government had long resisted local refiners' demands to raise duty on refined palm oil imports because of fears that such a move would stoke inflation.These fears have diminished following last year's good monsoon season which has limited food price increases.The lobby group representing Indian refiners said the measure was modest and would not affect inflation.
"This is an inflation neutral meagre support to the domestic refining industry as the duty gap with crude variant should have been more," said B.V. Mehta, executive director of Mumbai-based trade body the Solvent Extractors' Association.Fadhil Hasan, executive director of Indonesian Palm Oil Association, said the measure would hinder the country's exports to India.
"It will be more difficult for Indonesian refined palm oil producers to enter the Indian market," he said.A Kuala Lumpur-based trader said the hike would shift demand to CPO, forcing Malaysian refiners to seek new markets."Any displacement of import of processed palm oil means we have to find other export outlets," said Mohammad Jaaffar Ahmad, chief executive of Palm Oil Refiners Association of Malaysia.
Source:- in.reuters.com
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