On 11 August 2006, the union government announce reduction in import duty on palm group oils to cushion the impact of rise in international prices of edible oils on consumers and also check the domestic prices of such oils. Customs duty on crude palm oil, crude palmolein and other fractions of crude palm oil had been cut from 80 per cent to 70 per cent with immediate effect. The import duty on crude palm oil was increased from 65 per cent to 80 per cent in February 2005.
The Union Government also cut the import duty on refined bleached deodorised (RBD) palm oil, RBD palmolein and other refined palm oils from 90 per cent to 80 per cent.
The tariff value of crude palm oil, on the basis of which import duty is charged, has gone up from $417 a tonne in the first week of February to $447 in August. The Centres move also comes after edible oil prices have begun to rise sharply since the beginning of this month. For example, RBD palmolein prices have increased by Rs 25 for 10 kg to Rs 479 since August 1. On Friday, crude palm oil hit a two-year high in Kuala Lumpur before closing at $452 a tonne. Heavy buying by China and Europe besides companies engaged in bio-diesel production is the reason for the spurt in global prices.