Indian base oils import duty hike takes market by surprise

SINGAPORE (ICIS news)--Indian base oils market players said on Tuesday they were dismayed by the unexpected hike of import duty on base oils to 10% from 5% in the country's budget announced last week.

The Indian budget - announced on 28 February - also incorporates a hike in import duty on crude oil from zero to 5%.

“The reduction in duties implemented by the Indian government in 2008 at the height of oil price boom has effectively been reinstated,” a large Indian lubricant blender said.

Another base oils buyer said: "The import duty hikes on base oils were totally unexpected and shocking."

Import offers for group I base oils of Russian origin were heard around $760-765/tonne (€562-566/tonne) CFR (cost and freight) India for SN-150 and around $790-800/tonne CFR India for SN-500.

Local base oils refineries like Indian Oil raised domestic prices of the product by Rs1000-2400/tonne ($22-52/tonne) on 2 March citing higher costs due to increased import duty on crude.

($1 = €0.74 / $1 = Rs46)