KUALA LUMPUR: India’s palm oil import duty hike poses a temporary challenge to Malaysia’s exports, says the Plantation and Commodities Ministry.
“Such tariff changes are usually short-term and have minimal long-term impact,,” it said in a parliamentary written reply to Datuk Seri Hamzah Zainudin (PN-Larut).
Hamzah had asked about the government’s measures to address the effects of India’s 32% import duty hike and Indonesia’s reduction in export levy rates.
India, the world’s largest importer of palm oil, remains a critical market, with a population of 1.45 billion, ensuring continued demand for Malaysian palm oil products, the ministry added.
It also clarified that India’s import duty increase, termed effective import duty, has elevated rates for crude palm oil (CPO) from 5.5% to 27.5% and for processed palm oil from 13.75% to 35.75%.
“This includes the basic import duty plus additional taxes like the Agricultural Infrastructure and Development Cess and Social Welfare Cess.
“It is part of India’s efforts to protect domestic oil prices and support its domestic agriculture industry,” it added.
(A cess is a form of tax over and above the base tax, usually imposed when a government looks to raise funds for specific purposes).
In response, the ministry said Malaysia is leveraging strategic trade agreements to counteract the immediate effects.
“Through the Asean-India Free Trade Agreement and the Malaysia-India Comprehensive Economic Cooperation Agreement, Malaysia ensures that the import duty for CPO will not exceed 37.5% and for processed palm oil, 45%.
“If necessary, Malaysia could also consider exempting the export duty on CPO as a long-term measure to maintain competitiveness,” it added.
The ministry is also promoting the Malaysian Sustainable Palm Oil (MSPO) certification in the Indian market, emphasising its quality and sustainability over price changes.
The reduction of export levies by Indonesia also poses a competitive challenge, but the ministry remains committed to producing high-quality and sustainable palm oil.
“Research and development efforts are underway to boost the industry’s competitiveness, focusing on high-value-added products like bioplastics and biofuels.”
