Commodities

Inter-Ministerial group to fix licensing norms for refined palm oil import

Amiti Sen New Delhi | Updated on January 28, 2020 Published on January 28, 2020

Decision on procedures needs to be expedited to prevent domestic prices from spiralling

To enable shipments of refined palm oil to come in from countries such as Nepal and Indonesia following the government’s decision to place the commodity in the restricted import list, the Centre is working on licensing norms for its imports.

“An inter-Ministerial group comprising senior officials from Ministries and Departments including Food and Consumer Affairs will decide on the licensing norms. They will try to ensure that exporters from countries such as Nepal and Indonesia are not unnecessarily hassled,” a government official said.

Price rise fears

The Centre, however, needs to act fast on the matter as delay in firming up the licensing procedures could fuel an increase in prices of edible oil in the domestic market due to a shortfall in import of refined palm oil and an increase in import prices of crude palm oil, the official added.

Earlier this month, the Directorate General of Foreign Trade (DGFT), under the Commerce & Industry Ministry, restricted the import of refined palm oil into the country. Although the Ministry of External Affairs (MEA) had clarified that the restriction was not country specific, the decision has been largely viewed as a move to punish Malaysia, whose Prime Minister has been criticising India for its policy on Kashmir and the Constitution Amendment Act.

India has been Malaysia’s largest market for palm oil exports in recent years and the country purchased 4 million tonnes in 2019, of which about half was refined palmolein.

The MEA spokesperson’s comment that Indian businesses always factored in bilateral relations before taking a decision to import anything also seemed to hint that imports from Malaysia may have been the target. In fact, in October last year, the Indian government had informally asked its businesses to voluntarily stop importing palm oil from Malaysia but importers had resumed their purchases after the country dropped its prices in December.

However, Nepal, which, too, exports refined palm oil to India, has also been hit by the restriction and has asked the Indian government to take early action to resolve the matter. Indonesia, which is an exporter of both refined and crude palm oil to India, is yet another affected country. “Once the inter-Ministerial group finalises the import licensing norms for refined palm oil, importers can resume their purchases based on the established norms and countries like Nepal and Indonesia should not have any reasons for complaint,” the official said.

Nepal’s concerns

Nepal’s Commerce Secretary Baikuntha Aryal, in a recent interaction with the media, said that his country was awaiting clarification from India on the way forward in the import licence application process. He said that it was important for Nepal to know how importers should get the license from the competent authority following which exporters could fulfil all the procedures.

Palm oil exports now account for more than a fourth of Nepal’s total exports and a number of refineries that have been set up in the recent years have been suffering losses after New Delhi imposed its import restrictions.

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Published on January 28, 2020
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