Edible Oil Industry Seek Hike in Import Duty Gap Between Crude & Refined Palm Oil

The edible oil industry association ‘SEA’ on Thursday asked the government to increase the difference between the import duty levied on crude palm oil and its refined version, citing a dramatic increase in imports of refined palm oil.

In order to give domestic refiners an equal playing field, the Solvent Extractors Association of India has requested that the import tariff gap be increased to 15% from the current 7.5 percent.

In a letter to Food and Consumer Affairs Minister Piyush Goyal, the SEA stated that Indonesia benefits from the current lower import tariff difference of 7.5 percent between CPO (Crude Palm Oil) and RBD (Refined, Bleached and Deodorized) Palm olein oil.

According to the SEA, once the duty differential is increased, RBD Pal olein selling prices by Indonesian refiners will fall. It will also save the country a lot of money in terms of foreign exchange.

RBD Palm olein selling prices by Indonesian refiners will fall if the tariff differential is increased, according to the SEA. It will also save the government a lot of money in terms of foreign exchange.

"As a result, we respectfully urge that you consider raising the duty differential to 15% from the current level of 7.5%, which will provide a level playing field for the local refining industry," it added.

In recent months, India's CPO imports have displaced refined palm olein, according to SEA. Apart from the enormous discrepancy in processing, refined palm oil imports account for over 30% of the country's total palm oil imports, decreasing capacity utilization of Indian refiners.

“Our palm refining industry would be reduced to being mere ‘packers’ seriously jeopardizing heavy industry investments. We believe that this situation must be corrected before investments turn sour and add to lenders’ NPAs (Non-Performing Assets),” SEA stated.

Both Malaysia and Indonesia have large refining capacities and lower taxes on refined palm oil, which provides huge margins to Indonesian refiners, according to the report, imports provide 60% of India’s edible oil requirements.