India Cracks Down on Palm Oil Shortages as Tax Cuts Spark Buying Frenzy
India has increased its purchases of palm oil following a tax cut by New Delhi, leading refiners to replenish depleted inventories before the festival season. Over 200,000 tons of crude palm oil have been bought in the past week after the government reduced taxes on edible oil imports, according to Aashish Acharya, vice president at Patanjali Foods Ltd.
Inventories held by distributors and downstream buyers are running low, prompting a surge in purchases ahead of Diwali and the subsequent wedding season. India typically imports 500,000 to 650,000 tons of palm oil per month, and the sustained restocking push could quickly absorb excess supply, supporting prices.
The government's decision to halve the levy on imports of crude palm and soybean oils to 5% is expected to boost consumption during the festival season. Indian purchases may accelerate if prices fall further, with Aashish Acharya stating that 'If prices come down by another $40 a ton or so, India will buy more aggressively.'