India Hikes Import Tax on Edible Oils to Protect Farmers

India has raised the basic import tax on crude and refined edible oils by 20 percentage points. The move aims to protect farmers affected by low oilseed prices. This decision could increase edible oil prices, reduce demand, and subsequently decrease overseas palm oil, soyoil, and sunflower oil imports.

India has significantly raised the basic import tax on crude and refined edible oils by 20 percentage points, the government announced on Friday. The world's largest edible oil importer aims to protect its farmers, who are struggling with lower oilseed prices.

This policy change is likely to drive up edible oil prices and curtail demand, resulting in a reduction of overseas purchases of palm oil, soyoil, and sunflower oil. The Chicago Board of Trade soyoil reacted to the news by extending losses and falling over 2%.

The new tax structure, effective from September 14, will increase the total import duty on crude oils to 27.5% from 5.5%, including existing agricultural and social welfare surcharges. Refined oils will face a raised duty of 35.75%, up from the previous 13.75%. India's move aims to stabilize domestic oilseed prices and support farmers ahead of regional elections.

(With inputs from agencies.)