To keep palm oil market, Indonesia asked to make negotiations with India

News24xx.com -  GAPKI (Indonesian Palm Oil Entrepreneurs Association) expects the Indonesian government to strengthen of bilateral negotiations so as not to lose the palm oil market in India.

According to Sawit Indonesia.com, this step needs to be taken to deal with the doubling of import duties on CPO and palm oil processing products.

"In addition to large markets, India is also not a fussy market demanding various sustainability criteria such as Europe or America. It so unfortunately, if we lose the potential market, "said Joko Supriyono, the Chairman of GAPKI in Indonesia-India Business Forum on Palm Oil in Mumbai, September 13, 2017 in a written statement.

Indonesia-India Business Forum is a business meeting to discuss various issues related to bilateral trade between the two countries especially palm oil.

The event was opened by Indonesian Ambassador to India, Sidharto Suryodiputro. Attending the event were the Indonesian Consul General in Mumbai Saut Siringo Ringo.

In August, India's Ministry of Finance announced that the country increased its CPO import duty to 15%. Whereas previously the CPO import duty is 7.5%.

The import tax of refined palm oil also increased to 17.5% and 25% from the previous 12.5% ??and 15%. The increase in import duty could reduce the export of Indonesian palm oil to India.

Joko Supriyono said that currently Indonesia recorded a trade balance surplus with India.

"This should continue to be strengthened, for example by bilateral trade agreements. So that tariff-related issues can be discussed and agreed comprehensively, "said Joko.

On the same occasion, B.V. Mehta, Executive Director of Solvent Extractors Association, said that the increase in import duty imposed by India will affect the export of palm oil to India.

India is the largest palm oil export market. In 2016, palm oil exports to India reached 5.7 million tons.

"In 2017 exports to India could reach more than 6 million tons," Mehta said.

This Indian step, Mehta said, is actually intended to allow Indonesia to revise the relatively high CPO export tax. As a result of Indonesia's export tax, CPO prices in the Indian market are not competitive against refined products so there is no margin.

"As a result they prefer soft oil (soya, sun flower, rapeseed) which has better margins," he said.

Since the implementation of palm oil export tax in Indonesia, in the last 5 years there has been a decline in the market share of palm oil in Indian market compared to soft oil. If in 2011, palm oil controlled about 80% and the rest soft oil. In 2016 palm oil controls about 70% market share and soft oil share rises to 30%.

Although the volume of Indonesian exports is stable, but the market share of soft oil fell. This means that consumption growth in the Indian market can not be taken by Indonesia.

"Indonesia will lose its market in India now and in the future," Mehta said.

Joko Supriyono hopes, if the Indonesian government needs to pay attention to this issue more seriously and immediately discuss bilaterally with the Indian government.