The Indian Vegetable Oil Producers’ Association (IVPA) has said the government’s decision to allow the free import of refined palm oil and palmolein, besides reducing the customs duty on them will prove “fatal” for the edible oil refining industry.

In a statement, IVPA said this decision will impact the domestic refiners, as the reduction in the duty differential between crude palm oil (CPO) and refined palm oil by 5 per cent will make the refining of CPO non-viable in India.

At present, the C&F India prices of refined palm oil (finished product) is lower by $50-60 a tonne compared with CPO (raw material), it said. Major exporters such as Malaysia and Indonesia have stated that they would like to encourage value addition in their respective countries and have thereby imposed higher duties on CPO.

Also read: Import duty on refined palm oil cut

Indonesia has export taxes (including duty and levy) of $375 a tonne on CPO (raw material) and $248 a tonne on refined palm oil and refined palmolein (finished goods). This incentive of $127 a tonne (about 10 per cent) makes refining a non-viable proposition in India, it said.

Citing this, IVPA recommended to reinstate the duty differential of 14 per cent between CPO and refined palm oil / palmolein from the current mere 5.5 per cent.

It may be mentioned here that the government has allowed the import of refined palm oil/palmolein without licence for one more year till December 31, 2022, to increase domestic supplies, and reduced the customs duty by 5 per cent on the refined palm oil/palmolein in order to bring down prices of cooking oils.

Also read: Govt allows import of moong, urad and tur to continue without quantitative restrictions

On June 30, the government removed import restrictions on refined palm oil till December 31 as prices of edible oils had risen sharply. Prior to June, these imports were under the restricted category wherein an importer needed a licence or permission from DGFT.

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