JAKARTA: Indonesian and Malaysian palm oil refiners are growing at the expense of Indian refining units, thanks to lower duty on refined palm oil (RBD olein) exports since 2011. The inverted duty structure is incentivising those countries to export refined palm over crude palm oil (CPO). This means not only is India importing more RBD olein, it also has begun importing stearin, a by-product of CPO fractionation.
Atul Chaturvedi, CEO, Adani Wilmar, maker of the Fortune brand of oil, feels the way out to protecting the industry is by widening the duty difference between CPO and olein from the present 7.5%. This will not only reduce the financial stress on local refining units operating at just 35-40% capacity utilisation for palm but also cut imports of stearin, used by the oleo chemical industry to produce soaps, glycerine, etc. The government, much to the dismay of the edible oil industry, last month retained the 7.5% duty difference after cutting duty on CPO to 7.5% from 12.5% earlier and on RBD olein to 15% from 20%. Its aim was to reduce inflationary expectations on oils before the festive season.
