India’s Appetite for Vegetable Oil To Continue

Amidst recent import policy changes, India remains the global leader of imported vegetable oils.
In March 2018, the Government of India imposed higher tariffs on imported vegetable oils as
well as the cess tax imposed on imports. This jump in tariffs has cast doubt on India’s import
prospects for vegetable oil, especially for palm oil. For crude palm oil, the effective duty has
jumped from 7.73 percent in September 2016 to 48.4 percent in the most recent tariff changes1
.
The duty for refined palm oil is even higher, reaching an effective rate of 59.4 percent. While
soybean oil import tariffs are unchanged in the recent update, it should be noted that the effective
duty has jumped from 12.9 percent to 33 percent in the last couple of years. While the intention
for such tariffs is ostensibly to support domestic oilseed prices and the Make in India movement,
it has also dampened the outlook for India’s vegetable oil imports in the current marketing year.
Despite these changes in tariffs, however, several factors suggest India’s robust imports of
vegetable oil will continue. First, Malaysia’s decision to extend the export tax exemption,
coupled with the strengthening of the Indian rupee in comparison to the Indonesian rupiah, may
add tailwind to the purchasing power of palm oil in India. The proximity to major suppliers in
Malaysia and Indonesia adds to the competitiveness of palm oil as well. Second, weatherimpacted
crops in Argentina and strong biodiesel demand are forecast to reduce exportable
supplies of soybean oil to India, regardless of favorable tariffs, and would likely lead to more
demand for palm oil in India. Third, even with relatively competitive prices, global

Fuente: Usda

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