Stakeholders from edible oil industry have urged the Centre to increase the duty difference between crude palm oil (CPO) and RBD palmolein to at least 15 per cent from the existing 7.5 per cent, for better capacity utilisation within the country and to support the domestic refining industry.

In a memorandum submitted to Piyush Goyal, Union Minister of Consumer Affairs and Food and Public Distribution, and Commerce and Industry, the Solvent Extractors’ Association (SEA) of India and the Asian Palm Oil Alliance (APOA), have said the current import duty difference between CPO and refined oil of 7.5 per cent encourages import of refined palmolein into the country as opposed to CPO.

The memorandum signed by the SEA President, Ajay Jhunjhunwala, and the APOA Chairman, Atul Chaturvedi, said the palmolein imports increased by 168 per cent during the just concluded oil year 2021-22 (September to October). They said the import of palmolein (finished product) is contrary to the national interest and is seriously affecting the capacity utilisation of the palm refining industry in the country.

Import duty

The memorandum said the encouragement given by the palm oil exporting countries (Indonesia and Malaysia) to their industry is the main reason for increase in palmolein imports in India. Indonesia and Malaysia have kept high export duties on CPO (raw material) and low export duty on palmolein (finished product). The import duty difference between CPO and palmolein, which is 7.5 per cent in India, is insufficient to block the imports of palmolein, it said.

India imported 18.40 lakh tonnes (lt) of RBD palmolein during the oil year 2021-22 against 6.86 lt in 2020-21. The import of CPO stood at 59.94 lt during 2021-22 against 74.91 lt in 2020-21.

Indian refiners have made massive investments in the port-based palm refining industry to cater to the ever increasing demand for palmolein in the country. Importing CPO helps in value addition within the country apart from generating employment, they said.

However, now the palm refining industry in India is suffering from very low capacity utilisation and getting transformed into mere packers, compromising heavy investments made in this sector. “We feel the situation requires course correction to avoid investments turning sour and adding to NPAs. Needless to say, this is quite contrary to our Prime Minister’s clarion call of ‘Aatma Nirbhartha’ and value-addition within the country,” they said in the memorandum.

Boon for refiners

Terming the duty difference of 7.5 per cent as a boon for Indonesian and Malaysian refiners, the memorandum said the duty difference between CPO and refined palmolein needs to be increased from the current 7.5 per cent to at least 15 per cent. This may be done by increasing RBD palmolein duty from the current 12.5 per cent to 20 per cent without any change in CPO duty, it said.

“We feel 15 per cent duty difference could help reduce palmolein imports and replace the same with CPO imports overall. Overall imports into the country would not be affected and it will have no impact on edible oil inflation. On the contrary, it will help improve capacity utilisation employment generation in our country,” they said in the memorandum.