NEW DELHI, May 1: India, the world’s largest edible oil importer, has cut the basic customs duty on RBD palm olein to 70 per cent from 85 per cent to remove the duty differential between various oils, a government statement said.

The statement said RBD palm olein was also exempted from the special additional duty (SAD).

Finance Minister Jaswant Singh had announced a similar reduction in the customs duty on RBD (refined, bleached and deodorised) palm oil on Wednesday.

“The cut is going to hit the domestic processing industry very badly,” B.V. Mehta of the Solvent Extractors’ Association of India told Reuters. “This policy change will encourage refined oils imports over crude oils.”

“So far, we were importing large amounts of crude oil which was helping the domestic vegetable oil industry through better capacity utilization of refineries.”

India has some 600 refineries with an annual processing capacity of 6.0 million tons of crude oil.

“It will benefit the Malaysian and Indonesian refiners because we will be importing the end product now,” a leading vegetable oil trader said from Ahmedabad.

Traders said the customs duty differential between crude and refined palm oil had been brought down to around five per cent.

Dealers said the duty cut was unlikely to result in a sharp decrease in domestic prices of vegetable oils.

Imports of RBD palm olein currently account for only 0.4 per cent of total imports due to the duty differential. The country hardly imports any RBD palm oil.

India imports about 4.5 million tons of edible oil every year, almost half of what it consumes. Of this, crude palm oil accounts for nearly three million tons.

India also levies a basic import duty of 65 per cent on crude palm oil and 45 per cent on soy oil.

IFC LOAN: The International Finance Corporation (IFC) said on Thursday it had earmarked one billion dollars for lending to private Indian firms to make them more competitive in the world market.—Reuters/AFP