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India has cut customs duty on palm oil to the same level as that imposed on rival soy. Duty on crude palm oil was reduced to 40% from 50% on June 23, 2007. India is one of the world's biggest buyers of edible oil.
The cut in duty was meant to contain domestic prices, but it may have triggered a flare-up in Malaysian palm prices. This, according to some traders, defeats the purpose of reducing the duty.
Though prices fell the day after the announcement was made, domestic oil producers are mostly adopting a “wait and watch” policy before deciding to cut prices.
Some industry experts say cutting import duties is not the answer, and that the country must focus on raising productivity in order to ensure food security.
The government also cut the duty on crude soybean oil to 40% from 45%, and reduced levies on other edible oils.
India imports nearly 5 million tonnes of edible oil annually, a little over 50% in the form of palm oil from Malaysia and Indonesia, and the remainder mainly as soy oil from South America.
Oilseed production fell by 14.65% in 2006-07, causing more edible oil to be imported -- around 27.48 lakh tonnes between November 2006 and June 2007.
July 25, 2007
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