SEA wants Centre to restrict import of refined palm oils to save local refining industry

Stating that narrowing of import duty difference between refined and crude palm oils has the potential to kill the domestic refining industry, industry body SEA on Thursday demanded that the Centre again curb the import of refined palm oil and reinstate the earlier duty differential of 11 per cent between the two oils.
In December 2021, the government reduced import duty on RBD palmolein and RBD palm oils by 5.5 per cent to check prices of edible oils in the domestic market.

With this reduction, the import duty difference between refined palm oils and crude palm oil (CPO) was reduced to 5.5 per cent.

Normally India, a major importer of edible oils, largely buys CPO from the global market and refines it in the domestic market. But with duty difference getting reduced between the two oils, traders are shifting to refined palm oils.

In a letter written to Union Food Secretary Sudhanshu Pandey, Mumbai-based Solvent Extractors Association of India (SEA) President Atul Chaturvedi said: "We strongly appeal to the government to reinstate duty differential of 11 per cent between crude and refined palm oil as was prevailing prior to December 20, 2021 by reducing agri cess on CPO by 5 per cent. This would ensure a differential of 11 per cent in import levies between CPO and refined palm oils."

He also demanded that the government place again the import of RBD palmolein and refined palm oil under restricted list with immediate effect or at least from April 1, 2022.

"This will enable the domestic refining industry to have a level playing field and in line with our Prime Minister's vision of Make In India," he added.

Chaturvedi said the duty differential between CPO (raw material) and refined palm oil (finished product, which was 11 per cent earlier and has now been reduced to 5.5 per cent, has the potential of destroying the CPO refining industry in the country.

Further, buyers are shifting to refined palm oils as exporting countries like Indonesia and Malaysia levy higher taxes on CPO shipments than on refined palm oil, he added.

Chaturvedi also said, "We fear CPO imports in our country would now get replaced with refined palmolien and our palm refining industry would be reduced to being mere 'packers' seriously compromising heavy investments made in industry."

This situation needs to be corrected before investments turn sour and add to the non performing assets (NPAs) of lenders, he said adding that the current reduction of duty difference has come as a blow not only to domestic palm oil refining industry but to oilseeds farmers as well.

After a long time, domestic oilseeds have started selling above minimum support price (MSP) and improving farm incomes. This step would be counterproductive and contrary to the stated objective of increasing domestic oilseed production, he added.

The government in January 2020 had placed RBD palmolein in the 'restricted list' of import items. However, later it was taken off the list to boost domestic supply and check retail prices. Now, its import is allowed till December 2022.