India has not yet agreed to reduce CPO from Indonesia

CPO - JAKARTA. The Government's efforts to persuade the Indian Government to reduce import duties on crude palm oil (CPO) products have not been successful.

Last week President Joko Widodo (Jokowi) met bilaterally with Indian Prime Minister Narendra Modi, on the sidelines of the G20 Summit in Osaka, Japan. This bilateral meeting included discussing the reduction of palm oil tariffs from Indonesia.

Jokowi asked India to pay attention to the application of new import tariffs for the export of Indonesian palm oil. "The government needs to encourage the Minister of Trade to continue the discussion to reach a win-win solution," the President said on Saturday (29/6).

As an illustration, India increased import duties for Refined, Bleached, and Odorless Palm Oil (Indonesia) from 45% to 50%. The tariff is higher than the Malaysian CPO tariff of only 45%.

"So far, India has not responded to Indonesia's request," said Joko Supriyono, Chair of the Indonesian Palm Oil Association (Gapki) when contacted by KONTAN, Sunday (6/30).

Lost from Malaysia

Due to tariff differences, Joko said Indian importers tend to choose products from Malaysia. He was worried that this condition would make Indonesia's exports to India back down.

In 2018, Indonesia's palm oil exports to India declined. The export volume of Indonesian palm oil to India in 2018 reached 6.7 million tons, smaller than exports in 2017, which reached more than 7 million tons. "During 2019 Indonesia's palm oil exports to India are still declining," Joko explained.

To open the way, Indonesia offered an exchange to reduce import duties on raw sugar products from India to Indonesia. The easing was contained in the Minister of Finance Regulation (PMK) No. 96 of 2019 concerning the Establishment of Import Duty Tariffs in the ASEAN-India FTA Framework.

In the regulation, the Ministry of Finance stipulates that the import duty for sugar cane and other sugar cane is 5%. This rule changes the previous rule (PMK 27/2017), which stipulates sugar import duty using the most preferred scheme (MFN) or at least 10%.

Even so, until now India has not made changes to tariffs on Indonesian palm oil. In addition to the Government, entrepreneurs are also actively negotiating with India. "Employers continue to communicate and advocate along with other approaches," Joko explained.