05.02.2020 (The Malaysian Reserve) - INDIA’S import duty on crude palm oil (CPO) will likely be maintained at 37.5% for Asean countries despite the official notice of raised levy issued by its government.
On Saturday, India’s Ministry of Finance (MoF) stated in a circular the import tax for CPO was raised to 44% from the current 37.5%. The notification had sparked confusion among Indian refiners as New Delhi had recently slashed the levy from 40% on Dec 31 last year.
Industry consultant MR Chandran said the recent hike on India’s import levy was put in place to curb the indirect palm oil import from non-Asean countries to India.
“The reason why India increased its import tax is they have been getting indirect import from bordering countries like Nepal, Pakistan and Bangladesh. Traders from these countries have been buying palm oil from Malaysia and Indonesia, and exporting it to India.
“The hike was put up to prevent that from happening and it does not apply to direct import from Malaysia and Indonesia as we are governed under the Asean-India free trade agreement,” he told The Malaysian Reserve (TMR).
Bloomberg reported that India’s Central Board of Indirect Taxes and Customs has confirmed CPO importers in India will continue to pay a 37.5% levy on their purchases from Asean countries.
The report mentioned that the change in tax structures is part of India’s budget proposal announced last Saturday.
Indian Vegetable Oil Producers’ Association president Sudhakar Desai said the group had also noticed an unchanged structure in the existing duty on palm oil shipment from Asean countries, Bernama reported.
Beginning Jan 1, India’s import duty on CPO from Asean countries was slashed to 37.5% from 40%, while the refined palm oil products were revised to 45% from 50%.
India’s palm oil imports serve about 70% of the country’s edible oil requirements, an increase from 44% in 2001.
India is now mainly importing palm oil from Malaysia and Indonesia, who are members of the Asean trade bloc.
Its shipment from Malaysia and Indonesia currently comprises about two-thirds of India’s annual imports of 15 million tonnes.
Last year, India’s Solvent Extractors’ Association was reported to have requested its members to halt imports from Malaysia as a sign to protest against Prime Minister Tun Dr Mahathir Mohamad’s criticism of the steps taken by the Indian government in Kashmir and its new citizenship laws.
Despite the increase in India’s palm oil imports in December last year, its purchase from Malaysia fell to a 15-month low of 138,647 tonnes, which had been on a consecutive decline for five months, according to Malaysian Palm Oil Board.
Malaysia’s shipment to India continued to decline in January, dropping more than 50% compared to December last year.
According to data from independent cargo surveyor, SGS Malaysia Sdn Bhd, palm oil export to India fell 54.9% month-on-month (MoM) to 40,400 tonnes in January.
However, the data revealed palm oil demand from Pakistan surged 129.7% MoM to 141,500 tonnes in January compared to 61,600 in December 2019.