India extends free import policy on refined palm oil products till end-2022

India, the world’s top buyer of vegetable oils, extended its relaxation on refined palm oil and olein imports to Dec. 31, 2022, from its earlier deadline of Dec. 31, 2021, according to a notification by the country’s foreign trade regulator.

Imports of refined, bleached and deodorized palm oil or RBD palm oil, RBD palm olein, as well as other chemically unmodified fractions of palm oil will come under the free import policy till end of next year, India’s Directorate General of Foreign Trade said in a notification Dec. 20.
Since January 2020, New Delhi had placed refined palm oil products in a restricted import category in a bid to protect its local refining industry. However, in June this year, the government eased refined palm oil imports to free category to combat runaway food inflation and high vegetable oil prices.

The June ruling was set to expire by Dec 31, 2021. According to the DGFT, imports categorized as restricted need prior permission and license to be brought into the country.

Due to the easing, the share of refined oils climbed to 5% of total vegetable oil imports in marketing year 2020-21 (November-October) compared with 3% in 2019-20, showed data from national trade body the Solvent Extractors’ Association of India.

Since RBD palm olein is cheaper to import and does not need to be refined, it is usually the cheapest vegetable oil import available to Indian buyers. After refined palm oil imports were freed, there were concerns among India’s vegetable oil industry that refiners may be compelled to reduce run rates at their factories.

The move to extend the window for unrestricted refined palm oils comes right on the heels of another Dec. 20 order by New Delhi that directed local stock exchanges to suspend trading of seven agricultural commodities, including crude palm oil and soybean oil, for one year.

In October, the government also imposed stock limits on vegetable oils to prevent hoarding.

However, with no letup in supply tightness in the international vegetable oil markets, the government’s attempts to ease local inflation through easier import rules, as well as repeated cuts to import taxes on vegetable oils, has seen mixed results.

Currently, RBD palm oil and olein are effectively taxed at 19.25%, down from 41.25% in August. In the same time period, the import tax on CPO has come down to 8.25% from 30.25%.

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Tags: vegetable oils, India, refined palm oil, olein, deodorized palm oil, импорт