Govt cuts import duty on crude, refined palm oils under ASEAN, IMCECA pacts

The government on January 1 slashed import duty on refined palmolein from 50 per cent to 45 per cent, while that on crude palm oil (CPO) from 40 per cent to 37.5 per cent 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 added.

Opposing the move, the Solvent Extractors' Association of India (SEA) said that after the reduction in import duty, the tax difference between CPO and refined palmolein has reduced from 10 per cent to 7.5 per cent.

"This will have serious impact on domestic palm oil refining industry and oilseeds farmers. We fear import of refined palmolien would increase and capacity utilisation of our industry would be affected leading to potential loss of employment," SEA Executive Director B V Mehta said in a statement.

After a long time, the domestic oilseeds had started selling their produce above the minimum support price (MSP). "Lower import duty would make it difficult to defend MSP and the new found enthusiasm of the oilseed farmers would be dampened," he said.

The country's edible oil imports are now touching 70 per cent of the consumption. The duty cut would be counterproductive and contrary to the government's stated objective of increasing domestic oilseed production, he added.

Asserting that India too should protect the interest of farmers like Malaysia and Indonesia, the SEA said Indonesia from January 1 has imposed export duty of USD 50 on CPO and USD 30 on refined palmolien.

Similarly, Malaysia has imposed export duty of USD 31 on CPO and zero duty on refined palmolein which work out to be nearly 5 per cent on CPO value, thus effective duty difference is hardly 2.5 per cent only.

"We strongly appeal to the government to increase the duty differential between CPO and refined palm oil to 15 per cent, by taking appropriate measures," the industry body added.