India keeps high palm oil tariff despite RI protest: Minister

Zakki P. Hakim, The Jakarta Post, Jakarta

India will maintain its higher import duty on crude palm oil (CPO) despite complaints from Indonesia, Indonesian Minister of Agriculture Anton Apriyantono said on Monday.

Anton was in New Delhi last week where he met with his Indian counterpart.

"India says that the decision is final as it is aimed at protecting local manufacturers of edible oils," said Anton on Monday.

However, India promised to review the import duty periodically in response to global CPO price fluctuations, Anton said, adding that India was committed to maintaining the level of its CPO imports from Indonesia.

Anton met with India's agriculture minister, commerce and industry minister, and finance minister on the sidelines of last week's ministerial meeting in New Delhi of the G20 -- a group of developing countries set up to defend the interests of the developing world at the World Trade Organization.

The Indian government recently raised its CPO import duty from 65 percent to 80 percent to protect its farmers who grow soybeans and sunflowers, which yield edible oil that is a substitute for CPO.

This was followed by a move to increase India's import duty on olein, a CPO derivative product, from 75 percent to 90 percent.

Indonesia is the world's second largest exporter after Malaysia of palm oil -- a raw material for, among other things, 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.

Before India moved to raise the import duty on CPO, Indonesia had hoped to increase its palm oil exports to the country.

Earlier, Indonesian Palm Oil Producers Association chairman Derom Bangun said the association expected to increase CPO exports to India to 1.2 million tons this year from last year's 960,000 tons.

Local palm oil industries suggested the move by India could benefit Malaysia, which exports more palm oil derivatives than crude palm oil -- the complete opposite of Indonesia.

However, minister Anton denied this was true, saying that crude palm oil dominated Malaysia's palm oil exports to India last year, making up almost 64 percent of the exports, compared to Indonesia's 73 percent.

"There is not much of a difference," he said quoting data from the Indian finance ministry.

In total, Indonesian CPO imports account for about two thirds of India's total CPO imports, with Malaysia supplying the rest.

During his meetings in New Delhi last week, Anton said he proposed a cooperation in building CPO depots in several Indian states to boost CPO exports to the country.

India has yet to respond to the offer. India however, has offered both Indonesia and Malaysia the chance to hold bilateral preferential trade talks -- something India has done with Thailand, Malaysia and Singapore.

Anton said the offer would be forwarded to Minister of Trade Mari E. Pangestu for consideration.