India launches safeguard investigation on imports of palm oil from Malaysia

The government has initiated a ‘safeguard investigation’ on imports of certain varieties of palm oil from Malaysia to establish if the increase in imports of the items from the country over the last few months has been substantially causing ‘injury’ to the domestic industry.

It will also probe whether safeguard duties – penal import tariffs to protect local producers from surge in imports – should be imposed and what should be its value.

The Directorate General of Trade Remedies, which examined an application from local producers seeking safeguard duties on palm oil imported from Malaysia under the free trade agreement signed with the country, found ‘prima facie’ evidence that imports of the product had risen significantly causing serious injury to the domestic industry.

“...there is causal link between increased imports from subject country and serious injury to domestic industry. Further, imports are threatening to cause serious injury to the domestic producers of the product in India. It is considered appropriate to initiate (an investigation) in order to determine whether the imports of the product under consideration from Malaysia constitute increased imports and whether the increased imports have caused or are threatening to cause serious injury to the domestic producers,” said a Gazette notification from the Ministry of Commerce and Industry circulated on August 14. It further informed all interested parties to give their views within 30 days.

India lowered import duties on refined palm oil from Malaysia to 45 per cent from 54 per cent earlier this year as per the Comprehensive Economic Cooperation Agreement (CECA) signed by the two countries. The CECA also provides for imposition of safeguard duties in case imports rise sharply because of the lowered duties causing disruption for the local players.

The application for imposition of safeguard duties was filed by the Solvent Extractors’ Association of India on behalf of the producers of ‘refined bleached deodorised palm oil’ and ‘refined bleached deodorised palmolein’ in India. The application has been supported by large producers such as Adani Wilmar, Ruchi Soya Industries, Emami Agrotech and Liberty Oil Mills. The period of investigation has been taken as January 2019 -June 2019.

The petitioners claimed that imports of the two varieties of palm oil from Malaysia had increased in absolute terms as well as in relation to production and consumption in India and there was a sudden, sharp and significant increase. The applicant claimed significant decline in production, sales and capacity utilisation for the product because of the increased imports. It further said that the profits and productivity of local producers had declined and so had employment.