India's palm oil imports set to hit six-year low

India’s palm oil imports are likely to fall 15% in 2017-18 from the year before to their lowest in six years, hit by a hike in import taxes, a weaker rupee and tighter credit for would-be buyers, according to a Reuters report.

“Local prices moved up due to higher import tax and depreciation in the rupee. The price rise moderated demand for imports,” said Dr. B.V. Mehta, Executive Director, Solvent Extractors’ Association of India (SEA).

The government had raised import tax on refined palm oil in March to 54% to support local farmers. That made palm cargoes less appealing than shipments of alternative edible oils such as soya oil, sunflower oil and canola oil, at least until import duties on those commodities were raised to 45% in June.

For more than three months, palm lost its competitiveness in Indian markets relative to other oils due to the higher duty, said Mr. Sandeep Bajoria, CEO, Sunvin Group, a Mumbai-based vegetable oil importer.

India buys palm oil from Indonesia and Malaysia, with its soya oil mainly imported from Argentina and Brazil. Sunflower oil is sourced from Ukraine.

In the first nine months of the 2017-18 marketing year that started on November 1, India’s palm oil imports fell 9.5% to 6.1-mt, according to data compiled by SEA.

India now typically relies on imports for around 70% of its edible oil consumption, up from 44% in 2001-02. Palm oil accounted for as much as 86% of India’s total edible oil imports a decade ago, but its share last year dropped to 62% and could fall to a record-low of 56% this year, according to SEA data.

Lower palm imports will drag down India’s total edible oil purchases this year by 6% to 14.2-mt, Dr. Mehta said. “Earlier, imports used to rise by 7,00,000 to 8,00,000 tonnes per year. This year, we are witnessing a drop of the same amount,” he said.