May 8, 2007

 

India's food ministry does not favour soyoil duty cut

 

 

India's federal food ministry is not in favour of any immediate cut in import duty on soyoil from the current 45 percent unless there is a significant further increase in international prices, a senior ministry official said Monday (May 7).

 

A panel of government officials had recommended a cut in import duty on soyoil in February to keep a check on local prices following stronger international prices. Private sector industry officials also expect another cut in import duty on edible oils to stem inflation if import costs continue to rise.

 

"Currently, the food ministry is not keen on a duty cut on soyoils. If there is a rise in international prices, government can review the situation," the ministry official told Dow Jones Newswires.

 

He said the government favours import duties on various categories of edible oils to be "as uniform as possible" and steps have already been taken in this direction.

 

India levies an import duty of 45 percent on soyoil. In comparison, the import duty on crude palm oil has been reduced to 50 percent from 80 percent in three phases since August last year.

 

"The gap between import duties on palm and soyoil has narrowed in the last few months and if there is any cut in tariffs on soyoil, government may then have to reduce the duty on palm oils as well to avoid the widening of the gap again," said the official.

 

He said the government is monitoring the prices of edible oils on a daily basis to avoid burdening consumers.

 

International edible oil prices and freight rates have continued to increase since the last cut in import duty on palm oil. India currently imports crude soyoil around US$760 a tonne, cost and freight. The import cost of crude palm oil is close to US$750/tonne, C&F.

 

The government official said the cut in import duty on palm oils last month didn't have any significant downward impact on local prices as exporters in Indonesia and Malaysia have jacked up their rates.

 

India is one of the world's largest importers of edible oils by volume, mostly buying palm oil from Indonesia and soyoil from Argentina.

 

It is projected to import over 5.0 million tonnes of edible oils in the marketing year to October 2007.