Indonesia Plans to Increase Export Levy on Palm Oil

12-Jan-2026 05:32 PM

Jakarta. The Indonesian government is planning to increase its export levy on palm oil, which could lead to some improvement in global market prices for this important vegetable oil and a slight increase in India's edible oil import costs.

According to industry analysts, the higher levy may partially affect palm oil exports from Indonesia but could help boost biodiesel production there. While global stocks of edible oils remain at comfortable levels, the reduced supply of palm oil is unlikely to have a major impact, but prices are expected to rise somewhat.

According to available information, Indonesia currently imposes a 10 percent export levy on palm oil, and the government is planning to increase it. The additional revenue generated will be used to further the biodiesel blending program.

Currently, Indonesia mandates a 40 percent palm oil blend in biodiesel production, and the government plans to increase this to 50 percent during the current year.

This B50 program will require an additional quantity of palm oil, and therefore, the government is indirectly trying to discourage palm oil exports and encourage domestic use.

Indonesia remains the world's leading producer and exporter of palm oil, while India is its largest buyer. If palm oil prices rise in Indonesia, India could face significant difficulties.

Although India also imports palm oil from other countries, including Malaysia and Thailand, these supplier countries are not in a position to become a strong alternative to Indonesia.