To support farmers: After gold, India may now make cooking oil imports costlier

India is considering a proposal to raise import duties on vegetable oils as the government looks to support local farmers and reduce pressure on the rupee, Bloomberg reported on Monday.

According to the report, officials are examining whether higher import taxes on edible oils could help farmers secure better prices for their crops while also curbing foreign-exchange outflows linked to heavy commodity imports.

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The discussions come as the rupee remains Asia's worst-performing currency this year and as the government steps up efforts to reduce dependence on imported commodities such as vegetable oils, fertilisers, gold, and crude oil.

Earlier this month, Prime Minister Narendra Modi urged consumers to cut reliance on imported goods, including edible oil. 

Last week, the government hiked import duty on gold and silver to 15 per cent to curb non-essential imports.

India imports nearly 60% of its edible oil requirement, making it the world's largest buyer of cooking oils. Any increase in import duties could affect shipments of palm oil, soybean oil, and sunflower oil sourced mainly from Indonesia, Malaysia, Argentina, Brazil, Russia, and Ukraine.

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The proposal also comes at a time when global food prices are rising sharply. The Iran conflict has disrupted supply chains and pushed up prices of vegetable oils, cereals, and meat products.

Palm oil, the world's most widely used edible oil, has risen about 12% since the conflict began. The rally has been driven partly by higher biofuel production in Indonesia and Malaysia as producers attempt to offset rising energy costs.

However, India's potential move to raise import duties could slow purchases and temper the recent price surge.

The report said no final decision has been taken yet.

India had last year reduced the basic import duty on crude palm, soybean, and sunflower oils to 10% from 20% in an attempt to bring down domestic prices and provide relief to processors. The government had also asked the industry to pass on the benefits of the duty reduction to consumers.

Meanwhile, the Indian rupee weakened further and closed at a record low of 96.35 against the US dollar on Monday, pressured by rising crude oil prices.