The Central Government of India decided in early January to impose restrictions on RBD Palm oil imports. The decision applies to RBD Palm Oil and RBD Palmolein using category code 15119010 and 15119020. As a result, importers will need a permit to trade in RBD Palm Oil and RBD Palmolein.

The new import policy aims at protecting the interests of the domestic refining industry and improving its capacity and value.

Domestic impact

Indian imports of edible oil account for nearly 65% – equivalent to 15 million tons – of the country’s total requirement, which amounts to about 24 million tons. The country imports Palm oil in both crude and refined forms whereas oils such as rapeseed, soybean, and sunflower are traded only in the crude form.

Figures show that in the last 4 years RBD Palmolein imports have nearly doubled, jumping from 1.6 million tons in 2014-15 to 2.7 million tons in 2018-19 whereas imports of CPO plummeted from 7.7 mt in 2014-15 to 6.5 mt in 2018-19. This market shift seriously damaged Indian refiners, forcing the Government to take action and amend its import policy.

The Solvent Extractors Association of India (SEA) welcomed the decision to limit RBD Palm oil imports. SEA’s President Atul Chaturvedi expressed his gratitude to the Government, specifying that the move will “also support the Make in India call made by our Prime Minister.”

From January 1st, the Centre also amended the duty structure on imports of crude palm oil and refined palm oil, bringing down to 37.5 from 40% duties on imported crude oils, and to 45% from 50% duties on imported refined oils. However, the industry raised concerns on the move and objected that it could make refined palm oil import more attractive.

Reactions from Malaysia

India halted imports this month from Malaysia, its largest supplier and world’s second-biggest producer of palm oil.  The decision appears to be a response to critics from Malaysian Prime Minister Mahathir on India’s domestic policies.

Mahathir said it was necessary to find a solution for the problem of India snubbing Malaysian palm oil.

The boycott of imports from Malaysia could push up the country’s palm oil inventories and put pressure on its prices, which set the global benchmark for palm oil. It could also benefit Indonesia – the world’s largest exporter of crude palm oil.