New Delhi: The world’s largest importer of vegetable oils, India is looking at whether it needs to hike import tariffs on palm oil as part of efforts to assist millions of its farmers who are struggling from reduced oilseed prices.

India removed the basic import duty on crude palm oil (CPO) earlier this year in an effort to control pricing. A 5% levy on CPO imports known as the Agriculture Infrastructure and Development Cess is still in place in New Delhi.

The import duty on refined, bleached, and deodorised (RBD) palm oil in India is 12.5%.

“We are going through a proposal to bring back the duty on crude palm and raise the RBD duty,” said a government source who didn’t wish to be identified in line with official rules.

“We are going to keep in mind the interests of both farmers and consumers.”

According to the second government source, the industry has also petitioned the government to increase the import tax in an effort to support dropping oilseed prices.

“Soybean and groundnut prices have crashed in the past few months anticipating higher supplies,” said B.V. Mehta, executive director of the Solvent Extractors’ Association.

“In some places, the new crops are being sold even below MSPS (minimum support prices),” Mehta said referring to state-set support prices.

Gujarat, the home state of Prime Minister Narendra Modi, is the top groundnut and peanut producer in the world. Gujarat’s Bhartiya Janata Party is attempting to hold onto power.

The duty disparity between CPO and RBD should be at least 12-13% to encourage local refining, according to Mehta, and the government should increase the import tariffs on CPO and RBD by at least 10% to support dropping oilseed prices.

India imports vegetable oil from countries like Malaysia, Indonesia, Brazil, Argentina, Russia, and Ukraine to cover more than 70% of its needs. Nearly two thirds of India’s vegetable oil imports are palm oil.

In his Monday speech to a group of farmers, Modi expressed concern over India’s soaring import costs for vegetable oil and asked growers to increase their oilseed production.