Indonesia asks India to cut palm oil tariffs to match Malaysia’s

Indonesia has asked India to cut its tariff on refined palm oil to 45% and has offered market access for Indian sugar in exchange, the Indonesian trade ministry said on 23 February.

The proposed reduction in tariffs would match the levy faced by rival producer Malaysia, the Business Times reported.

Trade minister Enggartiasto Lukita made the request during a meeting with Suresh Prabhu, India’s Minister of Commerce, Industry and Civil Aviation. Lukita said that Jakarta had asked for a 5% cut in India’s import tax to match the 45% tariff imposed on Malaysian palm oil.

"In return, Indonesia is willing to open up market access for raw sugar from India that is needed by our national industry," he said, adding that Indonesia now imported raw sugar from Thailand and Australia.

Indonesia and Malaysia are the world’s largest producers of palm oil and India is the largest importer of edible oils.

Business Times wrote that the bulk of Indian palm oil imports usually came from Indonesia, which shipped 6.7M tonnes of palm oil to India 2018. However, the 5% tariff difference could increase Malaysia’s market share.

There was a sharp increase in imports of RBD palm olein from Malaysia to India to 167,429 tonnes in January, compared with 130,459 tonnes in December 2018, according to Cogencis.

Indonesia began relaxing levies on palm oil exports in December to stimulate trade in order to tackle low prices since the start of 2018.