India has now joined the countries aiming to boost local production of goods. As Nigeria and Ghana have begun to regulate the importation of rice and poultry into their territories, India has also started using stiff measures to combat the importation of palm oil.
The Details: The Government of India has decided to impose heavy fines on edible palm oil products as a means of discouraging the mass importation of the product. It also intends to increase goods and services tax on processed edible oil. This was reportedly disclosed by the country’s Finance Minister, Rajesh Malhotra.
Biggest loser is Malaysia: The move to produce palm oil locally may affect India’s trade ties with Malaysia, one of the biggest exporters of palm oil to India. The loss could also affect the $30 billion global industrial market due to India’s reputation as the world’s largest buyer of edible oil with a significant population of about 1.354 billion people.
However, the Malaysian Government has promised that Indian’s decision to curb palm oil importation would not affect the already strained trade ties between the countries after a Reuters report disclosed that India was seeking to punish the Malaysian Prime Minister for comments made at the United Nations General Assembly last month.
The statement made by the Malaysian Prime Minister, Mahathir Mohamad on Jammu and Kashmir – a Himalayan region at the centre of the dispute between India and Pakistan – at the UN event on September 27 was said to be serious.
What this means: This means that Malaysia, alongside other top oil exporters may have to look elsewhere following India’s new decision to boost local production while India carefully seeks different ways by which it can boost local production of edible oil.
Currently, India consumes a total of 25 million tonnes of refined palm oil products and imports a staggering 15 million tonnes of processed edible oil products. To be able to boost local production, the Southern Asian Nation needs to raise its production to 45 million tonnes between 2022 to 2023 from the 31 million tonnes of palm oil produced as at September 30, 2019.
Part of the nation’s initiatives to boost local production involves reviving the industry by doubling the income of palm oil farmers.