Central Government imposes restrictions on import of refined palm oil

Following repeated demands from solvent processors to protect the interests of domestic refiners, the Centre on Wednesday placed restrictions on the imports of refined palm oils.

A notification by the Directorate General of Foreign Trade (DGFT) stated that the government amended its import policy for refined bleached deodorised palm oil (RBD Palm Oil and RBD Palmolein) from current status of ‘free’ to ‘restricted’. The decision applies to RBD Palm Oil and RBD Palmolein imports under the HS code of 15119010 and 15119020 category.

Govt thanked

This means the importer willl need a permit to import the RBD Palm Oil and RBD Palmolein. India imports about 70 per cent or 16 million tonnes of its annual 24 million tonnes of edible oil requirements. The Solvent Extractors’ Association of India (SEA) President Atul Chaturvedi issued a statement thanking the government on the decision.

“This decision, will go a long way in supporting the domestic refining industry by value addition within the country, employment generation and improved capacity utilisation of the domestic refining industry and will also greatly help the farmers in receiving remunerative price for their produce,” he said, adding that it will “also support the ‘Make in India’ call given by our Prime Minister.”

For the November month of the current season (November 2019-October 2020), RBD Palmolein imports increased 12 per cent to 122,409 tonnes as against 108,911 tonnes in same month last year. Crude palm oil (CPO) imports for the same month fell 5 per cent to 540,421 tonnes from 568,376 tonnes in the corresponding month last year.

Domestic impact

Rising refined oil imports have been hurting operations of the domestic refiners. The data indicates that RBD Palmolein imports jumped from 1.6 million tonnes in 2014-15 to 2.7 million tonnes in 2018-19, but the import of CPO has drastically come down from 7.7 mt in 2014-15 to 6.5 mt in 2018-19, due to higher import of RBD Palmolein.

Notably, effective January 1, 2020, the Centre has amended the duty structure on imports of crude palm oil and refined palm oil in such a way that the duty difference between the imported crude and refined oils reduced to 7.5 per cent as against the earlier 10 per cent. The industry raised strong objection to it, expressing fears that it made import of refined palm oil more attractive and would hurt the capacity utilisation of the refiners.

Import duty cut

The import duty on crude palm oil was brought down to 37.5 per cent from 40 per cent and that on refined palm oil was brought down from 50 per cent to 45 per cent under the Asean agreement and the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA).

Earlier, the Indian vegetable oil Producers Association (IVPA) had expressed its concerns about the reduction in import duty on refined oils. It claimed that the duty differential would effectively be 2.5 per cent after Malaysia imposed export duty of 5 per cent, and encouraged refined oil exports.

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