India has decreased its tax on crude palm oil (CPO) imports to 5 per cent from 7.5 per cent, the government said in a release. The reduction in the tax, known as the Agriculture Infrastructure and Development Cess (AIDC), will broaden the gap between the CPO and refined palm oil import duties, making it cheaper for Indian refiners to import CPO.

In a different notification, the government also said it would expand a cut in a separate, essential customs duty on edible oils till September 30. India imports more than two-thirds of its edible oil requirement and has been struggling to hold the rise in local oil prices. The country imports palm oil from countries like Indonesia and Malaysia. Indian refiners have been demanding to reduce the import duty as the overseas buying of refined palm oil was cheaper than CPO due to higher taxes imposed by producing countries on exports of CPO.