The government of India had signed the Malaysia–India Comprehensive Economic Cooperation Agreement (MICECA) in October 2010, under which the effective duty on all products to be imported from Malaysia in to India would not be more than a mutually agreed threshold limit.
In this agreement the import duty on CPO and refined Oil would be automatically cut by four per cent and nine per cent from the existing 44 per cent and 54 per cent respectively. The provisions of this agreement are set to become effective from January 1, 2019.
The reduction in import duty would be a major blow for Indian farmers. The move would see more Edible Oil from Malaysia coming into India, making it a dumping ground as Malaysia is sitting on a massive stockpile. Increasing imports would mean lower domestic Edible Oil and Oilseed prices.
The stockpile in Malaysia is hitting at multi-year high on favourable climatic condition. Latest data released by the Malaysian Palm Oil Board showed that Malaysian Palm Oil stocks rose 10.5 per cent to three million tonnes in November the highest in at least 18 years.
Meanwhile, the Edible Oil industry, which has been facing margin squeeze due to low prices, has urged the government to impose a non-tariff barrier with possible quantitative restrictions and other such measures to restrict dumping.