Indonesia asks India to cut palm oil tariffs in exchange for sugar imports

Indonesian Minister of Industry, Airlangga Hartarto
(L-R) Trade Minister Enggartiasto Lukita, Transmigration Minister Eko Putro Sandjojo, Coordinating Minister for Legal, Security and Politics Wiranto, Administrative and Bureaucratic Reform Minister Asman Abnur, Industry Minister Airlangga Hartarto, Finance Minister Sri Mulyani Indrawati, President Joko Widodo, Vice President Jusuf Kalla, Coordinating Minister for Maritime Luhut Panjaitan, Energy and Mining Minister Archandra Tahar, Agrarian Minister Sofyan Djalil, Transportation Minister Budi Karya Sumadi, and Education Minister Muhadjir Effendy pose for photographers during the announcement of the new cabinet at Presidential Palace in Jakarta, Indonesia Reuters

Indonesia has asked India to cut its tariff on refined palm oil to 45 percent, matching the levy faced by rival producer Malaysia, and has offered market access for Indian sugar in exchange, the trade ministry said on Saturday.

Trade Minister Enggartiasto Lukita made the request during a meeting with Suresh Prabhu, India's minister of commerce, industry and civil aviation on the sidelines of an India-ASEAN Expo and Summit in the capital of New Delhi.

Jakarta asked for a 5 percentage point cut in India's import tax to match the tariff of 45 percent New Delhi charges on products from neighbouring Malaysia, Lukita said in a statement.

"In return, Indonesia is willing to open up market access for raw sugar from India that is needed by our national industry," he said, adding that Indonesia now imports raw sugar from Thailand and Australia.

India responded positively, the minister added.

Indonesia and Malaysia are the world's biggest producers of palm oil and India, the world's largest importer of edible oils, is an important market for both.

Delhi has already cut import taxes on crude and refined palm oil from Southeast Asian countries on Jan. 1, at the request of suppliers.

Traders said the bulk of Indian palm oil imports usually come from Indonesia, though a difference of 5 percentage points in taxes could increase Malaysia's market share.

Indonesia shipped 6.7 million tonnes of palm oil to India in 2018, its palm producers association says.