WTO: India raises concerns over trade barriers built in by Indonesia

India has raised concerns at the World Trade Organization (WTO) over a host of trade barriers built in by Indonesia, including export restrictions on palm oil and import curbs on bovine meat and automotive (auto) parts, holding that such measures have adversely impacted India.

“India remains concerned with the Indonesian import substitution programme and export policies. Indonesia is maintaining a number of restrictions on imports, as well as exports, which is affecting Indian businesses — both in terms of exports, as well as supply-chain disruptions. We have raised the matter in the Committee on Market Access and the Council for Trade in Goods at the WTO. However, Indonesia has not provided any clear response in the bilateral talks,” said a government official privy to the talks.

Indonesia last week banned the export of crude and refined palm oil amid global shortage of the edible oil after Russia’s invasion of Ukraine. After Malaysia, Indonesia is the second-largest source of palm oil for India.

India imported 42 per cent (or 3.4 million tonnes) of its total palm oil imports from Indonesia in 2021. Before the ban, Indonesia had put in place a high export duty and an export levy on palm oil, as well as adopted export-curbing procedures, pushing up the prices of palm oil and edible oils in India.

“India had requested Indonesia to take necessary action by not resorting to increasing the reference price of palm oil,” said the official quoted earlier.

Indonesia has also reduced the annual quota on bovine meat import. There are port restrictions on such imports, leading to an increase in export cost. A delay in the issuance of horticultural product import recommendations for agricultural products like onion, potato, etc has also affected India’s exports.

“We have also asked Indonesia to lift restrictions on the export of ginger,” added the official.

India exported bovine meat worth $262 million and vegetables worth $30 million in 2021. Indonesia has also placed quantitative restrictions on the import of autos and components.

“A delay in the issuance of permits for the import of Indian commercial vehicles could adversely affect Indian auto companies. Indonesian policies remain a concern for Indian chemicals and pharmaceutical products,” said the official.

In 2021, India exported autos and parts for $366 million, organic chemicals for $$536 million, and pharmaceuticals for $$119 million to Indonesia. Overall exports to Indonesia in 2021 rose 43.1 per cent to $8.1 billion, while imports increased 39.1 per cent to $16.7 billion during the same period, leading to a trade deficit of $8.6 billion.