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      Global Markets: Oilseeds – India Implements Further Cuts to Palm Oil Duties

      Soybean harvest. ©Debra L Ferguson

      India’s latest import duty cut on palm oil is another effort by the government to reduce domestic oil prices and food price inflation amid soaring global palm oil prices. Effective October 14, 2021, the Indian government cut import duties on crude and refined palm oil, a move following its earlier vegetable oil duty reductions in June and September. The October cut eliminated the base import duty for crude palm oil and reduced the duty for refined palm oil to 17.5 percent through March 31, 2022.

      The government has also limited stocking of edible oils and oilseeds through March in an effort to discourage importers from purchasing excess supplies to market after the duty reductions expire. Effective June 30, India reduced import duties on crude palm oil from 15 to 10 percent and on refined oil from 45 to 37.5 percent; in September, it cut the duty again on crude palm oil to 2.5 percent, and on refined palm oil to 32.5 percent. The September and October cuts also apply to soybean and sunflower oil duties.

      The lower duties are expected to boost India palm oil imports. Reports indicate that this series of duty reductions could benefit Indian consumers by lowering the cost of oil by 15 to 20 rupees per kilogram. Some major Indian edible oil companies have also reduced wholesale prices to provide consumers relief.

      As a result, India MY 2020/21 palm oil imports are anticipated up 470,000 tons to 8.5 million and MY 2021/22 imports forecast up 300,000 tons to 8.6 million. Some global suppliers of palm oil have already increased exports to India. Following the first wave of tariff reductions, palm oil imports in August and September more than doubled from the January-July 2021 monthly average.

      Indonesia, the top palm oil supplier to India, has been the primary beneficiary of the increase in demand. Indonesia exporters maximized shipments ahead of their own September export tax hike on crude palm oil. Malaysia and Thailand palm oil exports to India also rose markedly in August and September.

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