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India’s planned palm oil import tax hike could hurt RI exports
India has consistently been the second-largest export destination for Indonesian vegetable oil products, buying 16 percent of the country’s total shipments last year, according to International Trade Center (ITC) data, below only China’s share of 21 percent.
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Seeds of wealth: A worker unloads palm oil seeds from a pickup truck on July 10, 2024, after bringing them from a plantation to sell at a market in Sepaku, East Kalimantan. (AFP/Yasuyoshi Chiba)
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plan by India, the world’s top buyer of vegetable oils, to increase its import tax on the commodity could hamper the growth of Indonesia’s palm oil exports.
India has consistently been the second-largest export destination for Indonesian vegetable oil products, buying 16 percent of the country’s total shipments last year, according to International Trade Center (ITC) data, below only China’s share of 21 percent.
Muhammad Osribillal, an industry and regional analyst at Bank Mandiri, told The Jakarta Post on Monday that if the planned tax were implemented, Indian buyers would still purchase Indonesian CPO and refined, bleached, deodorized palm oil (RBDPO) products. However, the tariff hike would impede demand growth for those commodities.
From 2015 to 2019, a period in which India raised its CPO import tariff from 7.5 percent to 40 percent, Indonesian palm oil exports to New Delhi appeared stable, Osribillal said.
India’s CPO imports rose by an average of 75 percent in the five years before the previous tariff hike, but the country’s imports stagnated in the years following the tax increase.
“CPO import growth stagnated from 2015 to 2023, even decreasing by 1.9 percent,” he said.
Read also: EU embargo on Indonesian palm oil a blessing in disguise, Prabowo says
