India is unlikely to accept Indonesia’s demand that duty on imports of its refined palm oil be lowered to that imposed by Malaysia to provide a level playing field, a source in the know said.
“Recently, Indonesian government requested India to lower duty on refined palm oil originating from Indonesia by 500 basis points to 45% to reduce the duty gap between crude and refined palm oil to 500 basis points from 1,000 basis points currently. India is not going to consider their request,” he said.
India levies 45% duty on refined palm oil if it is imported from Malaysia, and 50% if imported from members of the Association of Southeast Asian Nations, which includes Indonesia, while import duty on crude palm oil is 40% for all nations.
In view of the double duty gap, importers are shifting to Malaysia for its cheaper refined palm oil, which is affecting Indonesia’s exports, the official said.
Last week, Indonesia’s Trade Minister Enggartiasto Lukita said that his country was ready to import raw sugar in bulk if India lowered the import duty on refined variant of palm oil to 45%.
A narrow duty gap would lead to imports of refined palm oil more than crude and affect the local industry and oilseed farmers, said B.V. Mehta, executive director of Solvent Extractors Association of India.
Last month, a lower duty gap resulted in a sharp increase in import of refined bleached deodorised palmolein from Malaysia to India to 167,429 tn from 130,459 tn in December, according to an SEA report.
India is the largest importer of palm oil, while Indonesia is the world’s largest producer and exporter, with Malaysia a close second.
India had imported 8.7 mln tn of palm oil in 2017-18 (Nov-Oct), including crude palm oil and its refined version, according to SEA data. End