Expressing concerns over the increase in the import of RBD palmolein during November-December and its impact on the domestic refining industry, the Solvent Extractors’ Association (SEA) of India has reiterated its demand to increase the duty difference between crude palm oil (CPO) and RBD palmolein to 15 per cent to provide a level-playing field to domestic refiners.

In a memorandum submitted to Sanjeev Chopra, Secretary of Department of Food and Public Distribution under the Union Ministry of Consumer Affairs and Food and Public Distribution, Ajay Jhunjhunwala, President of SEA, said exporters of RBD palmolein from Indonesia currently enjoy an advantage of $60 a tonne over CPO.

At present, Indonesia imposes a levy of $90 a tonne and an export duty of $52 a tonne on CPO, which is a raw material. This works out to a total of $142 a tonne. However, it imposes a levy of $70 a tonne and an export duty of $12 a tonne on RBD palmolein, which is a finished product. This works out to $82 a tonne.

As a result of this, RBD palmolein exporters from Indonesia are at an advantage of $60 a tonne over CPO. The current prices (CIF India) for CPO and RBD palmolein are $1,030 a tonne and for $985 a tonne, respectively.

‘Need for course correction’

This has resulted in a sharp increase in the import of RBD palmolein in the last two months — November and December. He said nearly 4 lakh tonnes of RBD palmolein is shipped into India depriving the domestic industry for capacity utilisation.

Palm refining industry in India is heavily suffering from very low capacity utilisation and getting transformed into mere packers, seriously compromising heavy investments made in this sector, Jhunjhunwala said. “We feel this situation requires course correction to avoid investments turning sour and adding to NPA (non-performing assets). This is quite contrary to the Prime Minister’s call of ‘aatmanirbharta’ and value addition within the country,” he said.

Stating that the low duty difference of 7.5 per cent is a boon for Indonesian and Malaysian refiners, he urged the government to increase the duty difference between CPO and refined palm oil 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, he said in the memorandum.

“We feel the 15 per cent duty difference could help reduce palmolein imports and replace the same with CPO imports. 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 and employment generation in our country. This would also be in line with our Prime Minister’s vision of Make in India,” Jhunjhunwala said.

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