(Reuters) – India’s food ministry wants to double the import tax on crude edible oils and raise that on refined oils by 50 percent, but is waiting for other ministries to give their views before passing its recommendation to the cabinet, the food minister said.

The world’s biggest vegetable oil importer levies a 2.5 percent tax on the crude variety and 10 percent on refined. It imports nearly 60 percent of its 18-19 million tonnes annual demand, mostly as palm oil from top producers Indonesia and Malaysia.

An increase in import duties could hit Malaysia’s palm oil futures, the regional benchmark.

“We’ve been getting requests for raising import duties on edible oils and my ministry has recommended increasing the duty to 5 percent on crude oils and 15 percent on refined oils,” Ram Vilas Paswan told Reuters in an interview.

Now some other ministries, including the Ministry of Commerce, have to give their views on it, Paswan said. After that process the recommendation would go to the cabinet for approval.

A rising population, increasing prosperity and low oilseeds output are stoking India’s vegetable oil demand.

In the current year that began in November 2014, India is likely to import a record 13 million tonnes of edible oils, a leading importer said in September, up from an estimated 11.6 million tonnes, including 8 million tonnes of palm oil, in 2013/14.

Lower food inflation would make it easier for India to raise import taxes on vegetable oils, said a senior food ministry official involved in the decision-making process.

Lower vegetable prices helped bring down wholesale food inflation to a near three-year low of 3.52 percent in September.

Separately, Paswan said he expects sugar mills to soon start operations in the biggest cane producing state of Uttar Pradesh.

Hit by a sharp rise in state-fixed cane prices and falling sugar prices, mills earlier this year threatened not to start operations in the new season that began in October. A senior government official on Oct. 29 said mills were expected to start functioning from November.

“Let mills start their operations first,” Paswan said when asked if the government would extend incentives to mills for exports of raw sugar.


(Editing by Michael Urquhart)

See at: http://in.reuters.com/article/2014/11/12/india-food-idINKCN0IW20220141112