By Rajendra Jadhav and Mayank Bhardwaj
MUMBAI/NEW DELHI, March 6 (Reuters) - India, the world's
biggest importer of vegetable oils, is considering raising its
import duty on palm oil to help support local farmers reeling
from a crash in domestic rapeseed prices, government and
industry officials said on Monday.
The increase in the tax on palm oil could lift local prices,
making the tropical oil a little less competitive than rival
soyoil and sunflower oil.
"We have proposed an increase in import duty on palm oil to
support rapeseed prices," said a government official, who
declined to be named in line with official rules.
"Rapeseed supplies from the new season are putting pressure
on prices, which have fallen below MSP (minimum support price),"
said the source referring to the government-set rate which acts
like a benchmark for the domestic market.
If commodity prices fall below MSPs, the government usually
tries to help prop up rates to protect farmers.
In spot markets, rapeseed prices were around 5,000 Indian
rupees ($61.21) per 100 kg, below the government-fixed price of
5,450 rupees per 100 kg.
Indian farmers plant rapeseed, the main winter-sown oilseed,
in October and November, with harvests from March. Higher prices
encouraged farmers to expand the area under rapeseed.
After abolishing the basic import tax on crude palm oil
(CPO) last year, India continues with a 5.5% tax on CPO
shipments. The country also levies a 12.5% import tax on
refined, bleached and deodorized palm oil.
"Since world prices have dropped, India is looking at
raising the duty," the source said. "Overall food inflation
might be a concern for the government, but vegetable oil prices
have dropped."
Lower rapeseed prices have hurt farmers from India's western
state of Rajasthan, and the government would like to protect
growers ahead of the state election, trade and industry
officials said.
Rajasthan accounts for more than half of the rapeseed
production.
"There is a proposal to raise the duty, and an
inter-ministerial panel is looking into it," said the second
source, who also didn't want to be named citing official rules.
($1 = 81.6830 rupees)
(Reporting by Rajendra Jadhav and Mayank Bhardwaj; Editing by
Shounak Dasgupta)
Twitter: @MayankBhardwaj9; Reuters Messaging:
mayank.bhardwaj.thomsonreuters.com@reuters.net))
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