The government of India decided to move palm oil imports from free to the restricted category. The move is in direction to curb on palm oil imports as government warns importers over palm oil from Malaysia.
The decision is a retaliatory action of a diplomatic spat of Malaysia’s Prime Minister in reference to CAA and Kashmir. Also, the government acted to protect the domestic refining industry. Though there is no official ban, importers are avoiding it because of fear of getting their shipment stuck at port. They are favoring Indonesian palm oil imports even if they have to pay a premium price. However, the commerce minister Piyush Goyal stated that if there will be any curb then it will be for all the countries.
Imports from Malaysia
India is the largest importer of palm oil from Malaysia since 2014. The country imported 4.4 million tonnes of palm oil in 2018, accounting for 24% of its total palm oil export. The imports are expected to come below 1 million tonnes and that is possible in case of shipment of old orders. India usually imports around 15 million tonnes of vegetable oil annually to meet domestic demand.
Prices to Remain Firm
Amid the restrictions, the price of refined palm oil reached up to Rs 90 per kg, making it a 3 to 5% increase. The crude palm oil has marked an increase of 2 to 3% and is available at Rs 84 per kg. It was available at Rs 839.8 per 10 kg in the first week of January. Experts predict that prices will remain firm until the domestic processing increases. Also, the mustard harvest will bring some relief, easing the prices. Industry analyst James Fryer stated that the restriction would result in Malaysia trading more refined oil with other countries. He regarded this move as a blessing in disguise.
Solvent Extractors Associations of India has expressed its concern over the decision to curb oil imports from Malaysia. It stated that the move may defeat. The government must put a cap (50,000 tonnes monthly) on total palm oil imports to protect domestic refined oil industries.
In all, refined palm oil was once the cheapest commodity in the import basket of India. The officials are trying to resolve the issue between the countries.