The Indian government has recently announced the waiver of import duty on all vegetable oils, aiming to ease consumer burden amid rising prices. This decision includes refined vegetable oils and solvent extracted oils, while coconut or copra oil remains subject to state trading enterprises. The move is expected to positively impact the Indian economy and provide relief to consumers [c1bc2dd6].
However, this development comes at a time when Malaysia's palm oil industry is already facing significant challenges. Indonesia has reduced its crude palm oil (CPO) duty from US$90 to US$63 per tonne, putting additional price pressures on Malaysian producers. In response, India has imposed a 20% tax on imported vegetable oils to support its farmers, further complicating the market dynamics for Malaysian palm oil [d9f195b8].
Malaysia's finance ministry is considering a reduction of the windfall tax on palm oil, currently set at 3,000 ringgit (US$718) per tonne, as production costs have nearly doubled to this level. In 2023, palm oil exports contributed over US$21 billion to Malaysia's GDP, highlighting the sector's importance to the national economy. However, Indian traders have canceled 100,000 tonnes of palm oil deliveries due to high prices, indicating a potential decline in demand [d9f195b8].
Additionally, Malaysia has called for exemptions for smallholders under the EU Deforestation Regulation, following the World Trade Organization's rejection of its complaint against the EU in March 2024. These developments underscore the interconnectedness of global agricultural markets and the challenges faced by producers in navigating new tax measures and international regulations [d9f195b8].