India rolls back tax cuts on palm oil imports
India rolled back a June 29 ruling which gave tax breaks on the import of crude palm oil, or CPO, as well as processed palm oil products, according to a notification issued by the country’s central customs board on Sept. 10.
The notice rescinded the June ruling, which reduced the standard import tax rate on CPO. The latest notification is effective from Sept. 11, which cuts short the earlier end-September time frame given in June ruling.
India — the largest importer of palm oil in the world — had cut its basic import duty on CPO to 10% from 15% effective from June 30 for a period of three months. Including the additional agriculture infrastructure and development cess, or agri cess, of 17.5% and a 10% social welfare cess, the reduction had brought down the effective tax rate on CPO to 30.25% from the earlier 35.75%.
While the move was meant to cool down domestic prices of edible oils, it failed to do so as international prices in Indonesia and Malaysia rose quickly to near record highs anticipating a renewed demand from Indian buyers.
CPO CFR West Coast India price rose more than 20% since June 30 to $1,207.5/mt on Sept. 10, according to S&P Global Platts data. The price of CPO FOB Indonesia has risen by 24% to $1,190/mt in the same time frame, Platts data showed.
The Sept. 10 notification has also rescinded the June tax break on processed palm oil products like refined, bleached and deodorized, or RBD, palm oil and palm stearin, which were being taxed at 37.5% since June 30.
Agri cess increased
New Delhi has also raised the agri cess on CPO to 20% from the 17.5% in a separate notification issued on Sept. 10.
It was not immediately clear how the effective tax rate on CPO, RBD palm oil and palm stearin will change.