Exclusive – India proposes to cut tariffs on edible oils: sources

NEW DELHI/MUMBAI (Reuters) – India has put a proposal to cut tariffs on edible oils on hold as global cooking oil prices began to fall after hitting record highs, two government officials and an official from the United States said. industry to Reuters.

The world’s largest vegetable oil importer considered cutting excise taxes after domestic soybean and palm oil prices more than doubled in the past year, hitting consumers already stung by record fuel prices and lower incomes during the COVID-19 pandemic.

We are not reducing import duties now, a longer term solution must be found. Scraping jobs is not a lasting solution, said an knowledgeable government official who asked not to be identified.

A second official, who also requested anonymity, said the decision to leave the structure of the import duties unchanged was made because prices in the overseas market now cooled, causing domestic prices to fall as well.

The idea is to keep a close eye on international prices and global deliveries, and if the situation warrants, revive the proposal for a reduction in the duty to protect the interests of both consumers and farmers, said this officer.

But even after the recent correction of more than 20%, edible oil prices in India are still around double the level of a year ago.

Household consumption is expected to decline as prices remain high.

Demand from wholesalers such as hotels, restaurants and bakeries had already fallen after authorities imposed local lockdowns in recent months in response to a devastating second wave of coronavirus infections in recent months, dealers said.

While India deliberated to cut tariffs on vegetable oil, benchmark palm oil prices in Malaysia fell by nearly a quarter last month, giving importing countries some respite.

India supplies nearly two-thirds of its demand for edible oil through imports, with a 32.5% duty on palm oil imports, while crude soybeans and soybean oil are taxed at 35%.

It buys palm oil from Indonesia and Malaysia, soybean oil and sunflower oil from Argentina, Brazil, Ukraine and Russia.

Aside from cutting government revenues, any cut in tariffs could give overseas suppliers the opportunity to raise prices, as palm oil exporters have done in the past, the first official said.

This should not be repeated, the official said.

New Delhi has worked hard to increase oil seed production and reduce its dependence on expensive imports.

We have told the government that now is not the right time to cut taxes. Farmers have started sowing soybeans and groundnuts. The tax cut would send them the wrong signal, a senior industry official said.

Indian farmers have started planting soybeans and groundnuts in the south and west of the country as monsoons have covered about two-thirds of the country.