India hikes import duty on Malaysian palm oil

The Government of India has imposed 5 per cent safeguard duty on imports of refined palm oil from Malaysia, thus, taking the customs levy to 50 per cent from current 45 per cent for 180 days. The government has issued a notification to increases the rate of duty of customs by 5 per cent on the product, commonly used to formulate trans-free fats such as margarine, shortening and vegetable ghee.

Under India-Malaysia free trade agreement, the current preferential tariff on crude palm oil is 40 per cent while on refined palm oil is 45 per cent. Out of overall palm oil imports, Indonesia and Malaysia accounts for major share. Historically, Indonesia used to be a major supplier of palm oil to India but due to India-Malaysia free trade agreement, imports from Malaysia became lucrative which resulted in 31 per cent increase in import from Malaysia to 25,96,225 MT in Jan-June, 2019. On the other hand, import from other countries declined from 23,15,292 MT in 2016-17 to 7,25,210 MT in Jan-June, 2019.

Palm oil contributes nearly 60-65 per cent of India's vegetable oil imports and this additional import duty would help domestic players to compete with cheap import.