India may reduce import taxes on some edible oils to rein in local prices, trade and government sources say

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Shoppers buy packets of vegetable oil at a supermarket in Mumbai, India, March 7, 2022. REUTERS/Rajendra Jadhav

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NEW DELHI, May 24 (Reuters) – India may soon reduce an import duty on crude soybean oil and crude sunflower oil, trade and government sources said on Tuesday, as the largest global importer of vegetable oil tries to limit local prices.

The reduction in the duty, known as the Agricultural Infrastructure and Development Tax (AIDC), could lower domestic prices and help domestic consumers and refiners cushion the blow of soaring food prices.

The government could either reduce or eliminate the 5% of the AIDC, said the sources, who did not wish to be named because they are not authorized to speak to the media.

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The government should also consider reducing the 5% AIDC on crude palm oil to help the local refining industry, said BV Mehta, executive director of the Solvent Extractors’ Association of India.

India has already abolished the basic import tax on crude palm oil, crude soybean oil and crude sunflower oil, but maintains the AIDC of 5% on these three grades of oil. edible oils.

New Delhi has struggled to contain a rise in local edible oil prices in recent months, and Russia’s invasion of Ukraine has made it even harder for the government to rein in vegetable oil prices.

India imports more than two-thirds of its edible oil needs and a sharp drop in sunflower supplies from the Black Sea region has further inflated local prices.

After retail and wholesale inflation hit multi-year highs in April, Prime Minister Narendra Modi’s government on Saturday announced a series of changes to the tax structure levied on key commodities to protect consumers from rising prices. Read more

India imports palm oil mainly from Indonesia and Malaysia, while other oils, such as soybean and sunflower, come from Argentina, Brazil, Ukraine and Russia.

India’s palm oil imports in June are unlikely to rise despite Indonesia’s decision to lift its ban on overseas shipments.

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Reporting by Rajendra Jadhav and Mayank Bhardwaj; Editing by Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

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