SOPA says, Palm Oil Duty Reduction Benefit Pocketed by Indonesia

Indore Commodities Control: Taking a note of undue benefits being derived by the exporters and importers following reduction on import duty on edible oils by the Indian government, the Soybean Processors Association of India (SOPA) has reiterated its demand for maintaining the existing duty structure on soybean and sunflower oils in the interests of the Indian oilseeds farmers.

In a letter to the Union Minister of Commerce and Industry--Piyush Goel, the Soybean Processors Association of India chairman, Dr Davish Jain said that SOPA has been advocating for quite a long time as to how the edible oil exporting countries have been taking advantage of India’s position as the second largest importer of edible oils.

Dr Jain adds that any reduction in customs duty in India, most of the time, is negated either by an increase in edible oil price by the exporters or by a levy of export tax by their governments.

Referring to the recent reduction in customs duty on import of crude palm oil by 10% by the government of India, the SOPA chairman said “soon after the reduction in import duty on palm oil, Indonesia has increased the export tax by US$ 30 per ton.

In the process, part of the benefit of duty reduction has gone to the Indonesian Government, while the Indian Government will suffer a revenue loss of Rs. 4600 crores in a year (taking CPO import at 70 lakh tons priced at US$ 900 per t on)”.

Dr Jain apprehended that there is a strong likelihood that the exporters in Indonesia will also increase their basic price soon after levying an export tax by the Indonesian government. Similar move is in the offing from Malaysian government.

The SOPA chairman said the demand from the edible oil importers to reduce custom duty on Soybean Oil and Sunflower Oil, ostensibly to help the consumers has only proved to be counterproductive, as any reduction in customs duty not only makes government lose its revenue without any substantial benefits to the consumers but also sends a negative signal to the oil seed farmers.

On the other hand, the real beneficiaries of the duty reduction happens to be the exporters and the importers, said the SOPA chairman in his letter.