| NEW DELHI/JAKARTA
NEW DELHI/JAKARTA Jan 10 Indonesia may consider
cutting the export tax on refined palm oil to offset an increase
in import tariffs by leading buyer India, officials and traders
said on Friday.
India on Thursday raised the import duty on refined edible
oils including palm oil to 10 percent from 7.5 percent to
protect local oilseed growers and refiners.
India is a major market for the world's No. 1 palm oil
producer, particularly since the euro zone crisis has weakened
demand from Europe, according to Indonesia's deputy trade
minister, Bayu Krisnamurthi.
"We'll watch (this development) closely and recalculate our
policy," Krisnamurthi told reporters.
The latest duty pushes up the landed cost of refined palm
oil in India to about $845 a tonne, which Indian traders said
was too steep.
Trade and industry officials expect Indonesia to cut its
export tax and major supplier Malaysia also to reduce prices of
its cargoes to maintain steady volumes of shipments to India.
"Everybody is waiting for Indonesia and Malaysia to adjust
their prices," a Mumbai-based dealer said. "Unless they reduce
prices, it will be difficult for Indian buyers to make
Indonesia imposes a 7 percent tax on refined palm oil
exports, while rival Malaysia allows tax-free shipments, traders
To encourage imports of crude palm oil, instead of the
refined variety, India kept the duty on crude palm oil unchanged
at 2.5 percent. Crude palm oil currently costs about $825 per
tonne on India's west coast.
"Exports (of refined oil) will be hit hard," a Kuala
Lumpur-based trader said, adding that Indonesian refiners'
margins will be affected if India imports more crude palm oil.
But India's vegetable oil refiners said the import duty on
refined oil ought to be higher still, with some recommending a
level of about 14.5 percent.
"This (duty hike) is too late and too little," said Dinesh
Shahra, managing director of Ruchi Soya Industries,
India's top edible oil buyer. "It may not do much to help the
plight of the Indian refining industry, which has been suffering
for the past year."
India's refined palm oil imports surged 40.5 percent to 2.2
million tonnes in the year to October 2013 after Indonesia
changed its tax structure to favour exports of refined products
over crude to support its refining industry.
Imported palm oil constitutes about 80 percent of India's
total annual vegetable oil demand of 17-18 million tonnes. New
Delhi also imports a small quantity of soyoil from South
(Additional reporting by Rajendra Jadhav in Mumbai and Anuradha
Raghu in Kuala Lumpur; Writing by Mayank Bhardwaj; editing by