India reduces taxes on vegetable oil imports

India has lowered the taxes on vegetable oil imports and rescinded earlier rulings on the base duty applied to palm oil, soybean oil and sunflower oil imports, according to two notifications issued by the country's central customs board on Sept. 10.

The notice changes the base import duty applied to all crude vegetable oil uniformly to 2.5%. Earlier, crude palm oil (CPO) used to be charged a base duty of 10%, while crude soybean oil and crude sunflower oil were charged a base duty of 7.5%.

The Sept. 10 notification also increases the additional agriculture infrastructure and development cess, or "agri-cess," of 17.5% on crude palm oil to 20%.

This restructuring of taxes has reduced the effective tax rate for CPO, crude soybean and sunflower oils to 24.75% from the earlier 30.25%.

The base duty rate on processed edible oils like refined, bleached and deodorized, or RBD palm oil and refined soybean and sunflower oil has been reduced to 32.5% from 37.5%. This reduces the effective tax rate on the import of refined edible oils to 35.75% from 41.25%.

While the June 29 move was meant to cool down domestic prices of edible oils, it failed to do so as international prices in Indonesia and Malaysia rose quickly to near record highs, anticipating a renewed demand from Indian buyers.

The CPO CFR West Coast India price rose more than 20% since June 30 to $1,207.5/mt on Sept. 10, according to S&P Global Platts data. The price of CPO FOB Indonesia has risen by 24% to $1,190/mt in the same time frame, Platts data showed.

The new tax structure is effective from Sept. 11, New Delhi said.

Corrects tax details, adds details on refined vegetable oil import duty