India again raises CPO tariff barrier

Zakki P. Hakim, The Jakarta Post, Jakarta

India increased on Thursday its base import price for crude palm oil to US$423 per ton from $400 a ton, thus making it more difficult for Indonesian crude palm oil (CPO) to enter the Indian market.

Minister of Trade Mari E. Pangestu said on Thursday that the government would continue negotiating with India for the latter to reduce the entry tariff barrier.

India set base prices for edible oils used for calculating the import duties of the commodities. The base prices are set in line with the global rate and are used instead of the actual landed costs of the oils.

"I have just received the news (of the raise) this afternoon," Mari said, adding that India also increased the base price for crude soybean oil, a main substitute and competitor for CPO.

India increased crude soybean oil to $558 per ton from $535 a ton.

Separately, the ministry's director for bilateral cooperation Deddy Saleh said Mari would lead a delegation, including private sector representatives, to India to talk on the reduction of the tariff barrier, among other subjects.

The Indian government raised in February its CPO import duty from 65 percent to 80 percent to protect its soybean and sunflower farmers, as both plants yield edible oil that is a substitute for CPO.

At the same time, India reduced CPO base prices from $454 per ton to $400 a ton, while maintaining soybean base prices at $565 a ton. Later, on March 1, India lowered soybean base prices to $485 per ton, thus making it more interesting for Indian importers to bring in soybeans rather than CPO, Deddy said.

Furthermore, coinciding with Minister of Agriculture Anton Apriyantono's visit with his counterpart in New Delhi mid this month to negotiate a lower tariff, India once again increased the soybean base price to $535 per ton, he said.

"India's moves implied that they were increasing the tariff barrier for soybeans to the level for CPO, whereas in fact the barrier is still significantly higher for CPO," Deddy said.

Indonesia is the world's second largest exporter after Malaysia of palm oil -- a raw material for, among other products, cooking oil, soaps and detergents.

Output from the two countries is expected to make up about 85 percent of this year's global palm oil production.