The Indian government has received a request from the Indian refinery sector to raise import duties on processed palm oil after Indonesia lowered its export taxes on palm oil, according to a source in the Ministry of Food Processing (MOPFI).
Indonesia has come under criticism for the introduction of a new tax regime that slashes the maximum export tax on refined, bleached and deodorised palm oil (RBD) to 10%, while the rate for crude palm oil remains at 22.5%.
Indonesia is the world’s largest producer of palm oil and it expects the new export levies to boost the growth of its refining industry.
“However this move is also potentially a fatal blow to Indian refineries and indeed refineries elsewhere in Asia,” the MOPFI source, who preferred to remain anonymous because of the issue’s sensitivity, told Food Navigator-Asia.com.
Indian industries have already begun importing more of RBD palm oil ahead of the festive season in India, which will stretch from October to the New Year, putting local refineries in trouble, continued the source.
“This is leaving refining capacity idle. It is not a comfortable situation from them and that is why they have requested the highest offices of the Indian government to raise the base price, or tariff value, for refined palm oils,” he said.
The MOPFI source added that the refiners have been demanding US$1,200 per tonne tariff value on RBD palm oil, against current norms where importers are taxed 7.7% duty based on the tariff value set at US$484 a tonne.
Though there are no official data as to how much of Indonesia RBD is being currently imported into India, local media outlet, Economic Times, reports that 50,000 tonnes of RBD palm oil has already been ordered for October.
In all, according to data from the MOPFI, India imports bout 6 million tonnes of crude palm oil every year from Indonesia, while Indian refiners have an annual capacity of 15 million tonnes.