Govt cuts import duty on crude, refined palm oils, SEA disappointed

The government on Wednesday slashed the import duty on refined palmolein to 45% from 50%, while that on crude palm oil (CPO) to 37.5% from 40% with immediate effect, a move that the industry opposed saying it will hurt domestic refiners. A notification in this regard has been issued by the finance ministry. The duty cut has been made under the Asean agreement and the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA), the notification said.

Expressing disappointment over the move, the Solvent Extractors Association of India (SEA) has urged the government to increase the duty differential between crude and refined palm oil to 15% by taking appropriate measures in the larger interest of the industry.

“Under the Asean and IMCECA agreements, the government reduced the import duty on RBD palmolein from 50% to 45% and on crude palm oil from 45% to 37.5% with effect from January 1, 2020. The duty difference between crude and refined palm oil has been reduced to 7.5% as against 10% earlier. This would make import of refined palmolien much more attractive and will seriously hurt the domestic refining industry. We fear import of refined palmolien would increase and the capacity utilisation of our industry would be affected, leading to a potential loss of employment,” Atul Chaturvedi, president of SEA, said.

“This action of the government has come as a blow not only to our domestic palm oil refining industry, but to our oilseed farmers as well. After a long time, domestic oilseeds had started selling above MSP and improving farm incomes. Lower import duty would make it difficult to defend MSP and the new-found enthusiasm of oilseed farmers would be dampened,” he said.

This would be counterproductive and contrary to our stated objective of increasing domestic oilseed production. Needless to mention, our edible oil imports are now touching 70% of our consumption, Chaturvedi pointed out.
To protect its local industry, Indonesia imposed an export duty of $50 on crude palm oil and $30 on refined palmolein with effect from January 1.

Similarly, Malaysia has imposed an export duty of $31 on CPO and a zero duty on RBD palmolein which works out to be nearly 5% on CPO value, thus the effective duty difference is hardly 2.5% only. Each country is protecting its own industry and we sincerely feel India should do likewise, Chaturvedi said.