Malaysia, Indonesia export sops for refined edible oils a worry, says IVPA chief
The recent increase in India’s edible oil import duties aims to support domestic oilseed prices but may be offset by cheaper refined oil imports from SAFTA countries, especially Nepal and Bangladesh. This practice, facilitated by Free Trade Agreements, poses a competitive challenge to Indian refiners.
After the hike in edible oil import duties, the industry fears that refined oils may reach India via Nepal and Bangladesh where the Free Trade Agreement (FTA) is in force. Getting the edible oils processed there and selling it in India can still be cheaper. Besides, the Government has to consider suitable steps as countries such as Indonesia have increased incentives on exporting refined oils. In an interaction with businessline, Sudhakar Desai, president of Indian Vegetable Oil Producers’ Association, said refined oil floodgates are open because Indonesia and Malaysia are widening the duty differential, reducing cost of refined oils through export incentives against prices of crude palm oil. Hailing the government for the long-awaited decision on the import duty hike, he said it was a bold step to support oilseed prices in the short term. Besides, the Centre has also rolled out the National Mission on Oilseeds and asked States to procure oilseeds at the assured MSP, he said.
The Government on September 13 had increased the duty on crude palm, soyabean and sunflower oil to 20 per cent from ‘nil’ and the levy on refined palm, soyabean and sunflower oils to 32.5 per cent from 12.5 per cent. After the revision, the imported crude oils are levied now at 27.5 per cent and refined varieties at 35.75 per cent, both including cess.
Desai said the current duty structure has opened the floodgates for zero-duty imports from SAFTA countries such as Nepal and Bangladesh. “This gives exporters, particularly of palm oil, an easy route to bypass India’s 35 per cent import duty, creating a substantial competitive imbalance. As Indian refineries have become packaging hubs, the risk to domestic manufacturing is profound,” he said. A strategic recalibration of duty structures is essential to protect the industry from this relentless influx, he said.
Secondly, the IVPA President said although recent duty increases were intended to support Indian oilseed prices, especially soybean, the desired price impact has not materialised. Soyabean prices remain below the minimum support price (MSP) due to persistent downward pressure on meal prices, he said. “This highlights an urgent need for more precise interventions to truly benefit India’s farmers and sustain domestic agriculture,” he said. Desa said while the Government is ready to fully support the farmers by buying at assured prices, ideally a normal pace of crushing and domestic oil production is more beneficial to substitute oil imports month-on-month. The IVPA president said the 7.5 per cent duty differential between crude and refined oils now lags behind recent export duty changes from Indonesia and Malaysia, where refined products enjoy up to a 10 per cent duty advantage as gainst crude oil. “Combined with significantly lower duties on by-products, Indian refiners are battling a non-level playing field. So, a more dynamic duty policy, responsive to global shifts, is imperative to ensure India’s refining industry can thrive in an increasingly competitive market,” he said.
