New Delhi: India, the world's biggest importer of vegetable oils, is looking to raise its import duty on Palm oil to support local farmers. This change could lead to an increase in domestic rapeseed prices and make tropical oil less competitive than other Soyoil and Sunflower oil alternatives. The measure is being taken as a result of a crash in local rapeseed prices, reported government and industry officials on Monday.

"We have proposed an increase in import duty on Palm oil to support Rapeseed prices," stated a government official.

"Rapeseed supplies from the new season are putting pressure on prices, which have fallen below MSP (minimum support price)," stated the source.

When commodity prices dip below the Minimum Support Prices (MSPs) set by the Indian government, they intervene to protect farmers from financial peril. Currently, rapeseed prices are trading in spot markets at 5,000 Indian Rupees ($61.21) per 100 kg - which is 450 Rupees less than the government-fixed price of 5,450 Rupees for the same quantity.

The planting season for Rapeseed begins in October and November, with harvests taking place in March. Higher MSPs have enabled farmers to increase their cultivation acreage due to more profitable returns; however, the recent fall below MSP levels has provided a stark reminder that investing in any commodity can be risky.

India has made some substantial changes to its import taxes on Palm oil products. Last year, it abolished the basic import tax on crude Palm oil (CPO). Currently, though, there is still a 5.5% tax on CPO shipments into the country and a 12.5% tax on imports of refined, bleached and deodorized Palm oil.

"Since world prices have dropped, India is looking at raising the duty," the source stated. "Overall food inflation might be a concern for the government, but vegetable oil prices have dropped."

Even though Rajasthan is responsible for more than half of India's rapeseed production, farmers have been struggling with declining prices. To protect growers in the state from further hardship and ahead of the upcoming election, government officials are advocating for intervention in the market to safeguard farmers' livelihoods.

"There is a proposal to raise the duty, and an inter-ministerial panel is looking into it," stated the second source.