The Solvent Extractors’ Association (SEA) of India has urged the Centre to include proper proviso in ASEAN agreement to restrict/regulate the imposition of export duty by the palm oil exporting country. SEA feels that this will ensure a level-playing field for both the countries that export and import palm oil.

In a letter to its members, Atul Chaturvedi, President of SEA, said that there is always a bound rate for imposing highest duty on palm products imported by India under ASEAN agreement and Comprehensive Economic Cooperation Agreement with Malaysia.

He said the palm oil exporting countries seem to be free to impose export duty and levy as agreements are silent on this issue. Indonesia has imposed $33 as export duty plus $180 as a biodiesel levy making crude palm oil (CPO) expensive. Following this, India is compelled to pay high price for the same.

To support their local industry, that country has kept export duty and levy low on finished goods such as RBD palmolein, he said.

“Indirectly, India is subsidising their export duty and levy. Also, as per market news, Malaysia is likely to impose 8 per cent export duty on export of CPO with effect from January 1 2021. It is, therefore, necessary that proper proviso be included in ASEAN agreement to restrict / regulate the imposition of export duty / levy by the exporting country to have level-playing field from both the sides,” he said.

Safeguard duty

Stating that ASEAN agreement is currently under review for revision of terms and conditions, he said SEA has also suggested to the Government to include the provision of ‘Bilateral Safeguard Duty’ under the revised ASEAN agreement. As and when excessive imports take place harming the domestic industry, additional duty maybe imposed automatically without going through the cumbersome process of filing papers for ‘Safeguard Duty’, he said.

SEA had a tough time last year to pursue for safeguard duty on RBD palmolein to check excessive exports by Malaysia into India. These excessive exports were severely hurting the domestic refiners, he said.

Stating that the recent decision of the Government to lower import duty on palm oil by 10 per cent came as a surprise, he said: “We were further intrigued by the decision to single out palm oil for special treatment while at the same time ignoring other soft oils like soya and sun oil.”

At its virtual interactions with senior officials, SEA had highlighted that any duty reduction by India would not help in reducing edible oil inflation, as any decrease will be negated by corresponding price increase internationally. “Indian Government is a big loser on the revenue front with no respite to consumers. Unfortunately, our fears have been proved correct as palm oil prices have risen big time since announcement,” Chaturvedi said.

Since CPO’s import duty has been reduced to 27.5 per cent from 37.5 per cent, SEA has suggested the Government that duty reduction on palm oil should have a natural ‘sunset clause’ and should revert to the pre-reduction level from March 1 to coincide with mustard harvest, he said, adding that this will give right signal to markets and the interest of mustard and other oilseed farmers would be protected from price fall.

To have a level-playing field, it would be more appropriate either to roll back the duty on CPO or the reduction should be made applicable to other oils such as soya, sunflower and rapeseed to counter the rising prices of CPO in the international market and provide level-playing field to all refiners, he added.

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