India cuts import taxes on wheat, palm oil, refined oils

NEW DELHI, India (Reuters) — India has cut import taxes on wheat, crude palm oil and refined vegetable oils as part of efforts to curb food inflation.

Analysts expect India will import several million tonnes of wheat this year due to a small domestic crop.

Indian wheat imports are rare, but the new demand is unlikely to have a serious impact on the global wheat surplus.

New Delhi lowered the wheat import tax to 10 percent from 25 percent and cut the import duty on both crude palm oil and refined edible oils by five percentage points to 7.5 and 15 percent respectively, the order on a government website showed.

Wheat output in India, the world’s second-biggest producer, has fallen well below the peak of 2014-15, reducing stocks to the lowest level in nearly a decade and pushing domestic prices close to record highs.

Private trade in India has already imported more than one million tonnes of wheat in 2016, the most in nine years.

Traders had expected the government to reduce or even abolish the 25 percent import tariff to make imports cheaper and ease a domestic supply squeeze.

“It’s a good sign. Lower import tax will step up the availability of wheat in the local market,” said Veena Sharma, secretary of the Roller Flour Millers Federation of India, the country’s main wheat industry body.

The cut in taxes on the import of crude palm oil and refined edible oils is expected to increase demand for palm oil from Malaysia and Indonesia, major suppliers that are already enjoying strong demand from China.

India is the world’s biggest edible oil importer. Indian crushers believe the cut to the import duty is mistimed.

“We’re a bit disappointed as we’re on the verge of harvesting a new oilseed crop. The reduction in the duty will put pressure on local oilseed prices,” said Atul Chaturvedi, president of industry body Solvent Extractors Association of India.

Local vegetable oil prices have surged by 20 percent in the past three months.

“The government should have rather raised the differential between the duties of crude and refined oils to support the domestic refining industry,” Chaturvedi said.

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