The association has urged the government to provide 10% duty difference to reduce the basic customs duty on CPO to 35% to maintain the differential with refined Palmolein at 10%.
The imports of RBD Palmolein (finished product) has doubled in just two months, thanks to reduction in duty difference from 10% to 5% for Malaysia. As anticipated, the nation is flooded with RBD Palmolein from Malaysia, the Solvent Extractors Association of India has said.
According to the association, the reduction of duty difference between CPO and Palmolein to 5% sourced from Malaysia has resulted in import of 2,75,000 of RBD Palmolein in February 2019. This is more than double from 1,30,000 tonne import in December 2018. The development has the potential of sounding the death knell of Palm refining industry in our country, the association has said in a representation to the finance minister Arun Jaitley.
“We hear from press reports that at the request of the Indonesian trade minister, the government of India is considering reducing the import duty on RBD Palmolein by 5% to 45% to bring it on par with Malaysia. If this happens, it would mean curtains for the domestic refining industry in our country and and imports of RBD Palmolein would go through the roof,” BV Mehta, executive director, SEA said.
“This anomaly needs to be corrected,” he said, adding that if this aberration is not rectified, our palm refineries would be destroyed. “The industry is demanding to create a duty difference of 10% between CPO and RBD Palmolein as was prevailing before January 1, 2019,” Mehta said.
“With the new development of likely reduction of import duty on RBD Palmolein of Indonesian origin, it is inevitable that duty on CPO should be reduced to 35% from the present level of 40%. Needless to mention that without a duty difference of minimum 10%, our refiners would be elbowed out of business resulting in huge loss of employment and increase in non-performing assets,” he said.
CPO duty reduction will not have much of an impact on farmers price as in the last two months international price of palm oil has gone up by $ 100, Mehta said.
The association has urged the government to provide 10% duty difference to reduce the basic customs duty on CPO to 35% to maintain the differential with refined Palmolein at 10%. This will ensure the survival of the Indian edible oil refining industry and reduce dependence on imports of refined oils, the association stated.