Raising strong objections to the Centre's decision of reducing the duty difference between Crude Palm Oil (CPO) and RBD Palmolein, the oil processors in India have requested the government to reconsider the move.

In a letter written to the Prime Minister's Office (PMO) and senior officials of other departments in the Ministries of Finance, Agriculture and Commerce, apex oil trade body Solvent Extractors’ Association of India (SEA) stated that the government’s decision is in contrast of the industry’s requirement.

“The (previous) duty difference of 10 per cent was not enough and the domestic refining industry was demanding raising the duty difference to 15 per cent. Contrary to this, the duty difference has now been reduced to just 5 per cent,” said a letter signed by SEA President Atul Chaturvedi.

He also stated that the move, which comes under international trade compulsions of a 2010 agreement with Malaysia and ASEAN nations to reduce the import duty on palm oil from January 1, 2019, will only prove detrimental for palm oil cultivation in the country and goes against the spirit of ‘Make In India’.

“It would seriously stymie the efforts at improving palm cultivation in India. Needless to say, this will also harm the interests of the oilseed farmers, who were lately getting enthused with relatively high import duties,” said Chaturvedi in his letter written on January 2.

SEA explained the duty structure saying that CPO imported from Malaysia earlier attracted 48.4 per cent duty, while RBD palmolein attracted 59.4 per cent duty inclusive of 10 per cent social welfare cess on the import duty. Under the new structure, CPO and RBD palmolein attract 44 per cent and 49.5 per cent duty, respectively, inclusive of 10 per cent social welfare cess on the duty.

In the case of imports from ASEAN countries, CPO and RBD palmolein attracted 48.4 per cent and 59.4 per cent effective duty, , respectively, inclusive of 10 per cent social welfare cess, while under the revised structure by the government, CPO and RBD Palmolein now attracts 44 per cent and 55 per cent effective import duty, respectively, inclusive of 10 per cent social welfare cess.

SEA red-flagged the decision, terming it the death knell for the domestic palm oil refining industry. “Further, the reduction in the duty difference will encourage larger import of RBD Palmolein, which is detrimental to the interest of the domestic industry,” said Chaturvedi.