India raises import duty on palm oil as Indonesia keeps waiver

NEW DELHI, Dec 27 (Bloomberg): India, the world's biggest buyer of palm oil, raised import duties on crude and refined varieties in a move to protect farmers from declining oilseed prices.

The tax on crude palm oil was raised to 7.5 per cent from 2.5 per cent, while the duty on refined grades was increased to 15 per cent from 10 per cent, the Central Board of Excise & Customs said on its website in a notice dated December 24.

The increase may counter the benefits shippers were expecting to gain from the scrapping of export taxes by Indonesia and Malaysia, which account for about 86 per cent of world supply. Indonesia extended today its zero duty for a fourth month to January, while Malaysia has already prolonged its duty exemption through February. Both countries are seeking to cut reserves in a year of unprecedented oilseed supply.

"The duty difference will help value addition" in India, B.V. Mehta, executive director of the Solvent Extractors' Association, said by phone. "Rising imports are hurting domestic farmers as they're not getting remunerative prices."

Palm imports rose for a fifth month in November from a year earlier, the association said December 12. Purchases in the year started Nov. 1 may rise 13 per cent to 8.75 million tons, Dorab Mistry, director at Godrej International Ltd., said last month.

Futures in Kuala Lumpur entered a bull market last month after the tax cuts by Malaysia and Indonesia and traded at 2,239 ringgit ($641) a ton today, rising 17 per cent from a five-year low on Sept. 2. In India, the price of soybeans has fallen 16 per cent from a year earlier to 31,800 rupees a ton, Mehta said. Imports of soybean oil rose to 121,097 tons in November from 14,980 tons 12 months ago, the association says.