NEW DELHI (Oct 29): India, the world’s biggest buyer of palm oil, is considering a proposal to further increase import taxes on the refined variety to boost local processing and cut dependence on overseas purchases, according to people with knowledge of the matter.

The government is discussing a proposal to impose a new levy in addition to the existing import duty and raise the goods and services tax on the processed tropical oil, the people said, asking not to be identified as the discussions are not public.

Rajesh Malhotra, a finance ministry spokesman, declined to comment on the matter.

Such a move by India could reduce refined palm shipments from top producers Indonesia and Malaysia. It may be bearish for benchmark palm prices, which climbed to a 17-month high on Tuesday on a brighter outlook for exports.

India imports about 15 million tons of vegetable oil, including its crude variety, every year to meet domestic consumption of about 25 million tons. The government is now trying to bridge the deficit by giving a fillip to domestic production.

A government-appointed panel on doubling farmers’ income has recommended that efforts should be made to boost local oilseed production to 45 million tons by 2022-23 from 31 million tons now. India’s refined palm oil imports climbed more than 30% from a year earlier to 2.61 million tons in the 11 months ended Sept 30.

Source : The Edge Markets