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India lifts restrictions on refined palm oil, olein imports: ministry

Highlights

Move comes in face of rising inflation

Local refiners expected to appeal decision

The Indian government will allow refined palm oil and olein imports "with immediate effect", according to a notice from the Indian Ministry of Commerce and Industry, with the concession in place till Dec. 31.

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According to the notice, refined, bleached and deodorized palm oil and olein have been moved from the "restricted" to "free" import category.

In January 2020, the Indian government placed refined palm oil imports in the "restricted" import category in a bid to protect local refiners. As a result of the move, olein producers in the region began to focus shipments on the China market instead.

"I think this move is mainly to counter inflation as food prices have been steadily on the rise. Local demand for olein has been weak due to the COVID-19 situation, and I do not expect a massive increase in palm olein imports," said one India-based trader, who added this stance could change depending on how the pandemic situation pans out in the country.

Another source also said that this was likely to impinge on local refining margins.

According to Nagaraj Meda of Transgraph Consulting "this is a backward step for Indian manufacturing and refiners. Currently the duty difference [in India] between CPO and Palm Olein imports is around 11% after the correction yesterday, and this exceeds the difference in Indonesian export tariffs between CPO and olein, of $104/mt, approx. 10%. In Malaysia CPO duty is $89/mt and with no duty on olein. Most likely CPO and olein prices in India will become equal impacting local refiners. Thus, this decision will shift the business from Indian refiners to Malaysian and Indonesian refiners."

Meda added that it was likely local refiners would strongly appeal the latest decision.