India slaps 5% safeguard duty on palm oil imports from Malaysia

The revenue department has imposed 5 per cent safeguard duty on imports of refined palm oil from Malaysia, taking the customs levy to 50 per cent for six months, a move aimed at protecting interest of domestic players.

The safeguard duty on ‘Refined Bleached Deodorized Palmolein and Refined Bleached Deodorized Palm Oil’ has been imposed following a recommendation by the commerce ministry’s investigation arm Directorate General of Trade Remedies (DGTR) for 180 days.

The revenue department has issued a notification to “increases the rate of duty of customs by 5 per cent” on the product, commonly used to formulate trans-free fats such as margarine, shortening and vegetable ghee.

The DGTR had conducted a probe into alleged jump in imports of the product from Malaysia, after a complaint from Solvent Extractors’ Association of India (SEA).

It had recommended “an increase in rate of duty of customs by 5 per cent, for a period of 180 days” on the imports, originating in Malaysia and imported under India-Malaysia Comprehensive Economic Cooperation Agreement. Under India-Malaysia free trade agreement, the current preferential tariff on crude palm oil is 40 per cent while on refined palm oil is 45 per cent.

The DGTR had said that critical circumstances exist where delay in imposition of safeguard measures would cause irreparable damage to the domestic producers. Its investigation into the imports is being carried out under India-Malaysia Comprehensive Economic Cooperation Agreement (Bilateral Safeguard Measures) Rules, 2017.

The agreement is a kind of free trade pact under which both the countries have reduced customs duties on several goods traded between them.

The petitioner, SEA, had claimed significant decline in production, sales and capacity utilisation for the product. They have also stated that market share of Indian industry has declined whereas share of imports has increased. The period of investigation was January-June 2019. It also considered the import data of 2016-19.

The DGTR had noted that there was a sharp and significant increase in imports of the product during the POI (period of investigation). Imports from Malaysia increased from 6,26,362 tonnes in 2016-17 to 25,96,225 tonnes in Jan-June, 2019 (on annualised basis), showing an increase of 314 per cent. Imports from other countries declined from 23,15,292 tonnes in 2016-17 to 7,25,210 tonnes in Jan-June, 2019 (on annualized basis).

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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