The Indian government has extended the reduction in taxes on edible oil imports for another year, until March 2025. This initiative aims to control food inflation, according to information from Reuters on January 16.
Originally, the reduced taxes on imports of crude palm oil (CPO), crude sunflower oil and crude soybean oil were to end in March 2024. The extension was brought forward given the government's interest in keeping prices stable before the elections, according to observations by Sandeep Bajoria, CEO of vegetable oil brokerage Sunvin Group.
In December, annual retail inflation in India accelerated, marking the fastest increase in four months, driven in part by rising prices of certain foods, as reported by Reuters.
India imports palm oil from Indonesia, Malaysia and Thailand, and soybean and sunflower oil from Argentina, Brazil, Russia and Ukraine. In December, refined palm olein imports peaked due to competitive prices.
However, this long-term policy generates negative consequences for local oilseed producers. BV Mehta, from the Solvent Extractors' Association of India, points out that cheap imports put pressure on seed prices, discouraging farmers from expanding planting.
India, importing more than 2/3 of its edible oil, faces the challenge of increasing domestic oilseed production. Farmers, in turn, see alternative crops as more profitable, a reality that the country seeks to change.
Source: Oils & Fats International
