The commerce ministry on Monday recommended a 5 per cent increase in customs duty on the imports of refined palm oil from Malaysia to 50 per cent for 180 days, a move aimed at protecting interest of domestic players.
The ministry's investigation arm DGTR has recommended the duty after conducting a probe into alleged jump in imports of refined bleached deodorised palmolein and refined bleached deodorised palm oil from Malaysia, following a complaint from Solvent Extractors' Association of India (SEA).
"The Director General recommends increase in rate of customs duty on imports of subject goods originating in Malaysia by 5 per cent, for a period of 180 days which is considered appropriate to safeguard the interest of domestic industry," the directorate general of trade remedies (DGTR) said in a notification.
Under India-Malaysia free trade agreement, the current preferential tariff on crude palm oil is 40 per cent while on refined palm oil is 45 per cent.
"It is considered that critical circumstances exist where delay in imposition of safeguard measures would cause irreparable damage to the domestic producers," the DGTR said.
The central government, on the basis of the preliminary findings of the Director General, may suspend further reduction of any rate of customs duty on the originating good provided for under the Trade Agreement from the day when the bilateral safeguard measure is taken or increase the rate of customs duty on the originating good to a level not to exceed the lesser of, the DGTR suggested.
The DGTR said after examining the application filed by the petitioner, it has prima facie found sufficient evidence that the imports have increased significantly causing serious injury to domestic producers.
The investigation is being carried out under India-Malaysia Comprehensive Economic Cooperation Agreement (Bilateral Safeguard Measures) Rules, 2017. The agreement is a kind of free trade pact under which both countries have reduced customs duties on several goods traded between them.
The application for the probe was filed by SEA on behalf of domestic producers. It had alleged that increase in imports of the oil from Malaysia is causing serious injury or there is a threat of serious injury to domestic producers.
The petitioner had claimed significant decline in production, sales and capacity utilization for the product. They have also stated that market share of Indian industry has declined whereas market share of imports has increased. The period of investigation was January-June 2019. It also considered the import data of 2016-19.
The product is commonly used to formulate trans-free fats such as margarine, shortening and vegetable ghee.
The notification said imports of the product have increased significantly in the period of investigation (POI) in absolute terms.
"There is a sharp and significant increase in imports of the product during the POI. Imports from Malaysia increased from 6,26,362 MT in 2016-17 to 25,96,225 MT in Jan-June, 2019 (on annualized basis) thus showing an increase of 314 per cent. Imports from other countries declined from 23,15,292 MT in 2016-17 to 7,25,210 MT in Jan-June, 2019 (on annualized basis)," it added.
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