India cuts duty on refined, crude palm oil from Asean

The government has cut import duties on crude and refined palm oil from Southeast Asian countries. India imports 60% — 15.5 million tonnes annually — of its edible oil requirements, largely from Malaysia, Indonesia, Argentina and Ukraine.

The duty on crude palm oil from Malaysia, Indonesia and other members of the Association of South East Asian Nations was cut to 40% from 44%, while the tax on refined palm oil was cut to 45% from 54% if imported from Malaysia and to 50%, if purchased from Indonesia or other member-nations of Asean, the ministry of finance said in a ministry notification issued on Monday.

The industry said the duty reduction would lead to increased imports of palm oil and it was too early to say if Indian consumers would benefit. The Solvent Extractors Association said that the duty cut, effective from Tuesday, would impact the domestic palm oil refining industry and hit oil palm cultivation. The industry pegs the country’s edible oil consumption at 23.5 million tonnes for 2018-19 and expects to import 15.5 million tonnes, with 60% from Malaysia and Indonesia, followed by soyabean oil from Argentina and Brazil, sunflower oil from Ukraine and Russia and canola oil from Canada.

With 8 million tonnes of palm oil imported annually, domestic production was only 3,00,000 tonnes, the Solvent Extractors Association said.

“This decision of government is contrary to the ‘Make in India’ efforts and would also seriously stymie the efforts at improving palm cultivation in the country. This will also harm the interests of the oilseed farmer who was lately getting enthused with relatively high import duties. We hope the government of India would realise the situation and take appropriate steps to save oil palm plantations and palm oil refiners,” said Atul Chaturvedi, president of the Solvent Extractors Association.

 

With the rupee strengthening to Rs 69.50 from Rs 74.40 against the dollar and international markets at a 6-7 year low, edible oil prices were at the lowest, said Sandeep Bajoria, chief executive officer of oil consultancy firm Sunvin Group.

“It’s early to say if consumers will further benefit from this move. However, with the difference between crude and refined palm oil reducing from 10% to now 5%, refineries in the country will face a difficult time,” he said.