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The association has warned that cheap imports of refined palm olein are adversely affecting the edible oil refining sector and could have long-term repercussions.
The Solvent Extractors' Association of India (SEA) has urged Union Minister for Consumer Affairs, Food and Public Distribution Pralhad Joshi to raise the import duty on refined, bleached and deodorised (RBD) palm olein to 40%, from the current rate of 32.5%.
In a letter addressed to Joshi, SEA president Sanjeev Asthana explained that the duty differential between refined palm oil and crude palm oil currently stands at no more than 7.5%, and should be raised to at least 15%.
"We believe a 15% duty differential would help reduce imports of refined palm oil and replace them with crude palm oil imports, without affecting overall import volumes or pushing up edible oil prices," Asthana said.
Better Utilisation Of Production Capacity
He added that such a move would help improve the utilisation of domestic production capacity and boost employment within the country, in line with the Prime Minister's "Make in India" vision.
He noted that cheap imports of refined palm oil have been harming the edible oil refining sector and could have long-term consequences.
Asthana explained: "India imports huge quantities of palm oil from Indonesia and Malaysia. Traditionally, Indian importers brought in only crude palm oil, and substantial sums have been invested in setting up port-based palm oil refining capacity to meet the country's growing demand for refined palm oil."
He stressed that importing crude palm oil generates domestic value addition and creates new jobs. However, the current 7.5% duty differential encourages imports of refined palm oil rather than crude.
Citing data, Asthana noted that the cost-and-freight (C&F) price of refined palm olein is currently $50 a tonne lower than that of crude palm oil, which he described as "against the country's interest."
He explained that the main reason behind the surge in refined palm olein imports is that Malaysia and Indonesia support their domestic refining industries' exports by imposing higher export duties on crude palm oil. He pointed out that the current duty gap is insufficient to curb these imports.
Asthana concluded that the domestic refining sector is being harmed, requiring urgent corrective intervention.
Source: Al Mal Forum