Increase in import duty on palm oil in India is a temporary challenge for Malaysia

12-Dec-2024 07:49 PM

The increase in India's import duty on palm oil is seen as a temporary challenge for Malaysia, according to the Malaysian Plantation and Commodities Ministry.

While the higher duties may affect the competitiveness of Malaysian palm oil exports in the short term, the ministry emphasized that such changes in customs duty rates are usually short-lived, based on past experience. The impact of these adjustments on the palm oil industry is expected to be limited in duration.

A key issue raised by a member of the Malaysian Parliament was the combined effect of the Indian duty hike and Indonesia's decision to reduce export rates.

The parliament member inquired about Malaysia's strategy to address these challenges in the short, medium, and long term.

India, the world's largest importer of palm oil, has seen significant imports from Malaysia and Indonesia. In November 2024, India imported 483,000 tonnes of palm oil products from Indonesia and 314,000 tonnes from Malaysia.

Given India's population of over 1.45 billion, its demand for palm oil will continue to grow, ensuring that Malaysia remains a key supplier despite the temporary duty hike.

The increase in duties — from 5.5% to 27.5% on crude palm oil (CPO) and from 13.75% to 35.75% on RBD palmolein — is part of India’s broader policy shift.

However, Malaysia's government remains confident that the demand for palm oil in India will persist, and the duty increase will not have a lasting impact on Malaysia's palm oil industry.