20/03/2008 (Bloomberg) - India, the world's biggest buyer of vegetable oil after China, cut import duties on edible oil to ensure adequate domestic supplies and curb inflation.
The reduction takes effect from midnight, the finance ministry said in a statement issued in New Delhi today. India's inflation is at a 10-month high.
The duty on crude palm oil including crude palmolein has been cut to 20 percent from 45 percent; on refined palm oil including RBD palmolein to 27.5 percent from 52.5 percent; on crude mustard, rapeseed, colza and canola oils to 20 percent from 75 percent; on refined mustard, rapeseed, colza and canola oils to 27.5 percent from 75 percent; on crude sunflower oil to 20 percent from 40 percent, and on refined sunflower oil to 27.5 percent from 50 percent.
In addition to this, the 70 percent import duty on semi- milled or wholly milled rice has been scrapped. This exemption will be available only up to March 31, 2009, the ministry said.
India cut the tax on vegetable oils four times in 2007 and this week banned exports of all cooking fats for a year, joining China, Malaysia and Indonesia in securing food supplies. Prime Minister Manmohan Singh's government has curbed exports of rice, wheat and lentils, and banned futures trading in some commodities to slow inflation before elections.
Edible oil imports tripled to 430,992 tons in February from a year earlier amid expectations for a surge in domestic demand as the winter oilseed crop is forecast to drop on bad weather.
The winter-sown oilseeds harvest may decline to 8.6 million tons from 9.52 million tons a year earlier, according to the Mumbai-based Solvent Extractors' Association of India. Output of mustard seeds, India's biggest winter-sown oilseed crop, may fall 15 percent to 5.09 million tons this year.
The nation relies on imports to meet half its edible oil needs. It buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil. Palm oil and soybean oil rates reached a record this month on demand for food and fuel.
Palm oil prices have gained 70 percent in a year. Soybean oil, palm oil's main substitute, has doubled in the same period.
India's inflation accelerated to a 10-month high in the first week of March, making it more difficult for the central bank to cut interest rates to bolster slowing economic growth.
Wholesale prices rose 5.92 percent in the week ended March 8 from a year earlier, faster than the previous week's 5.11 percent, the Ministry of Commerce and Industry said in New Delhi today. A Bloomberg survey of 13 economists had forecast a 5.11 percent gain.