Malaysia Sees India's Palm Oil Import Duty Hike as a Temporary Adjustment; Strong Bilateral Trade Continues

Malaysia said it has eased concerns over India's latest increase in import duties on palm oil, dismissing that as a short-term fluctuation that will not affect their trade relations. The palm oil demand in India remained firm despite the incrementing of tariffs, according to Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani. The country, being the largest importer of edible oil worldwide, in mid-September 2023 increased its import duties for crude and refined palm oil. Duties on crude palm oil had been raised to 12.7% from 5.5%, while those on refined oils had risen to 35.75% from 13.75%. Dismissing the view that the increase in tariffs will have a huge impact on palm oil exports from Malaysia to India, Ghani said this while speaking at the Malaysia Palm Oil Forum at a press conference. He said India had other sources of edible oils such as palm, sunflower, and soybean oils, and Malaysia and India had always been good friends, and their relationship would continue as it was; he assured India that Malaysia would always provide sustainable palm oil. Malaysia has ruled out speculation over a trade-advance barter deal struck between itself and India involving palm oil and the latter's fighter aircraft, said Minister for Commerce Ghani. He said the two nations maintain trade agreements jointly based on mutual needs and shared economic interests rather than any form of exchange involving defense equipment. A trade shift by India to increase its import duty is part of the broader tariff policy to attempt to balance the nation's edible oil production with imports. Changes in the opposite direction may have temporarily altered trade flows, Ghani noted, but the palm oil trade remains a bright long-term prospect. The country's palm oil production will exceed 19 million metric tons in 2024, the highest since 2020. Malaysia also wants to aid in India's development of its domestic palm oil industry. Recently, Agriculture Minister Shivraj Singh Chouhan from India met Ghani, during which he asked for Malaysia's know-how and availability of seeds and technology to enhance the country's capability to increase its palm oil production ability. According to Ghani, it is part of overall plans to increase bilateral ties with Malaysia depending on rice, onion, and sugar exports into India. At the international level, Ghani spoke to the rising protectionist trade policies to call for fairness in international trade practice. To this end, he added that on sustainability, the palm oil industry in Malaysia had made some great strides with more than 81% of its plantations certified under the Malaysia Sustainable Palm Oil (MSPO) standard. This fits perfectly well with global expectations of environmentally friendly agriculture. The other policy that Ghani explained was the European Union's Deforestation Regulation, which aims to ban the imports of goods linked with deforestation. Despite initial expectations, the policy is not planned to take effect anytime soon, as the European Commission recently postponed it to December 2025. Malaysia assumes its responsibility as an opportunity to adjust its trade pattern and abide by international provisions without losing its markets. He even feels that the existing trade relationship will persist in the long run because of mutual cooperation and shared economic benefits and is more confident of the future of Malaysia's palm oil sector into the future. Conclusion: With a rise in tariffs in the recent past, Malaysia is hopeful of palm oil trade with India. Since the recent rise in tariffs should be merely cosmetic and would not have significant implications for the longer term, Malaysia feels relieved of near-term apprehension. Comforted by the belief that both countries would continue to be interested in each other's growth of palm oil cultivation and would, therefore, maintain smooth commercial bilateral relations, Malaysia is confident about its sustainability and fair trade practices for the palm oil market globally. Source:PTI