Government likely to slash import duty on edible oil

The government may cut import duties on cooking fat or increase purchases on global markets, bolstering prices.

"We are considering both the options,'' Federal Food Secretary T Nanda Kumar said in an interview in Dubai today. "Improving supplies and reducing prices is the main concern for the government.''

India cut import taxes on vegetable oils four times last year to curb inflation, joining China, Malaysia and Indonesia in taking measures to stockpile staple foods and stabilise prices. Higher purchases by India may support prices of palm oil and soybean oil, which jumped to records today.

Palm oil jumped to a record after Indonesia, the biggest producer, said it would increase export taxes if prices exceed $1,100 a tonne.

The oil reached 3,458 ringgit ($1,070) in Malaysia. Soybean oil, palm oil's main substitute, also rose to a record, gaining for a ninth day to 56.25 cents a pound in Chicago.

"We will continue to track prices and take the steps needed,'' Nanda Kumar said. "It has to be timed well so as not to transfer the benefit to the exporting nations.''

India's edible oil imports may rise 15 per cent to as much as 5.4 million tonnes in the 12 months ending October 31 compared with a year earlier, according to a Bloomberg survey last month. Imports climbed 7 per cent to 4.72 million tonnes in the year ended October from 4.42 million tonnes a year earlier, according to the Solvent Extractors' Association of India.

The country imports palm oil from Malaysia and Indonesia, and purchases soybean and sunflower oil from Brazil and Argentina.