India Cuts Palm Oil Import Duty


India Cuts Palm Oil Import Duty
Palm oil fruits. © ldambies

India recently implemented a temporary cut in the duty charged on palm oil imports, part of an effort to offset a sharp run-up in prices over the past year.

Analysts said the move will probably lead to a rebound in palm oil demand in India, the world’s largest importer of the commodity, which is used primarily in foods and biofuels but also in renewable lubricants.

Get alerts when new Sustainability Blog articles are available.


Palm oil prices have roughly doubled in the past year, according to the International Monetary Fund’s global index for the commodity. Those increases are in line with hikes for plant oils. The trend for the broader category has been blamed mostly on unusually dry weather in areas such as the United States, Canada and Argentina, which are key producers of oil crops, and to the COVID-19 pandemic, which has hampered harvesting of palm oil in countries such as Indonesia and Malaysia, the two largest producers of palm.

The price run-up has alarmed governments primarily because of the implications for food costs. Palm and other oils are used in a very wide range of foods.

On June 30, India’s central government reduced the basic import tax on crude palm oil from 15% to 10%. Palm oil imports are also subject to two other taxes in India, so the total import duty decreased from 35.75% to 30.25%.

India’s action came after Indonesia reduced the duty that it charges to palm oil exports. Nevertheless, CFR crude palm oil prices on India’s West Coast continued to climb upward, and analysts said the trend could well continue as the cuts in duties was expected to trigger increased demand in the country. India palm oil imports fell from 9.4 million tons in 2019 to 7.2 million tons in 2020 and had been forecast to remain flat this year, according to a June 29 article by S&P Global.

India accounts for more than half of global palm oil imports.

Relief provided India’s tax cut may be temporary as the reduction is scheduled to expire at the end of September.

In addition to being the highest volume plant oil, palm oil is the plant oil most commonly used in renewable lubricants.