India is planning to cut taxes on some cooking oils to cool the domestic market after prices soared due to the Ukrainian war and a palm oil export ban from Indonesia, according to people familiar with the matter. India, the world’s largest importer of vegetable oil, is seeking to reduce the development tax on agricultural infrastructure and imports of crude palm oil to 5 per cent from 5 per cent, people familiar with the matter said.

The new tax is still under consideration, the people said. A tax is levied on top of the introductory rate for specific projects to fund agricultural infrastructure projects. Essential import duties on crude palm oil have been removed.
India is particularly vulnerable to soaring vegetable oil prices, as it relies on imports for 60 per cent of its demand.

Prices, which have been rising for the past two years, continued to increase after Russia invaded Ukraine to stop sunflower oil exports. Indonesia, the top exporter of edible oil, banned palm oil exports to protect its domestic market.

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India has tried to lower prices in the past, including lowering import duties on palm, soybean and sunflower oils, as well as limiting inventories to prevent hoarding. These measures were less effective because they sparked expectations of higher purchases, further pushing up international prices. The government is now seeking to reduce import duties on crude oil varieties such as rapeseed, olive, rice bran and palm kernel oil from 35 per cent to 5 per cent to help boost domestic supplies, the people said.