Industry officials expect India’s refined palm oil imports to plunge while crude palm oil (CPO) surges after changes made to the country’s trade tariffs.

In a move to protect its domestic farmers, India doubled the import duty on CPO to 15% and raised the tax on refined, bleached and deodorised (RBD) palm olein from 15% to 25%, reported Hellenic Shipping News on 21 August.

“We expect a significant shift from imports of RBD palm olein to CPO due to the hike in duty differential. The share of CPO in total palm imports is expected to rise to over 90% from 69% last year,” said Dinesh Shahra, managing director at Ruchi Soya Industries, which is a leading Indian palm oil refiner.

While the move would boost domestic refiners, their Indonesian and Malaysian counterparts were likely to be hit by the change, as India is the world’s largest palm oil importer.

“It’s not going to be easy now. There will be an impact where refiners will be getting a lot of the blow,” an upstream manager at a Malaysian plantation company told Hellenic Shipping News on the condition of anonymity.

Crude products for domestic refining generally rule India’s oil imports, but Indonesia and Malaysia’s increased taxes on crude palm oil exports to promote their own refining industry made refined oil cheaper for Indian importers.

The changes to their tax policy caused refined palm oil to gobble up 31% of India’s total palm oil import in 2015/2016 marketing year which ended in October 2016, when in the previous year their share was only 17.4%.

Sandeep Bajoria, CEO of Mumbai-based vegetable oil importer Sunvin, said that since the duty change, certain Indian importers had already begun requesting CPO instead of RBD products.

According to Hellenic Shipping News, India had imported 6.74M tonnes of CPO and 2.2M tonnes of refined palm oil in the first nine months of the current marketing year, which began in November 2016.

Palm oil’s share in India’s total edible oil imports has been on a steady downward spiral due to competition from soya and sunflower oils, dropping to 58% in 2015/2016 from the 80% it held in 2012/2013.

Edible oil importers said the new duty change could increase soya imports further, as the import duty on soya oil is only 17.5%, compared to the 25% on refined palm oil.