 "sunflower oil")
India has urged Argentina to do away with its 30 per cent export duty on crude sunflower oil. In return, it has offered to give import duty concessions on the edible oil under the existing preferential trade agreement (PTA) with Mercosur countries.
India is looking to sign long-term contracts with Mercosur countries to import crude sunflower oil as Russia’s invasion of Ukraine has disrupted imports from Europe’s second-largest nation, leading to skyrocketing of edible oil prices in India, Business Standard reported on March 26. India is also exploring reviving sunflower plantations in South India to be able to partially meet the domestic demand in the long run.
“Argentina imposes export duty on sunflower oil. We have asked them if they do away with the duty, we will also give import duty concession. India last year decided to reduce MFN (most-favoured nation) duty on crude sunflower oil imports to zero to curb rising edible oil prices. If India decides to again raise MFN rates, Argentina will have the advantage because of the duty concession under discussion,” an official privy to the discussions said.
Argentina has been targeting China for sunflower oil exports since India has tariff quota as well as plant quarantine restrictions. India has also offered to do away with the stringent testing requirements under the existing PTA with the grouping. India signed in 2004 a PTA with Mercosur, the Latin American trading bloc with Argentina, Brazil, Paraguay, and Uruguay as its members.
Last year, India’s exports to Mercosur countries jumped 67.4 per cent year-on-year to $7.8 billion, and imports grew 51.7 per cent to $9.1 billion.
India imports 60 per cent of its edible oil requirements, and sunflower oil constitutes around 14 per cent of such imports. In 2021, India imported 90 per cent of the $2.4 billion worth of crude sunflower oil from Ukraine and Russia, and only $233 million worth of sunflower oil from Argentina.
Edible oil markets heaved a sigh of relief after Indonesia, which is the world’s largest producer of palm oil, clarified that the export ban announced last week won’t be applicable to crude palm oil but will only cover shipments of refined, bleached, deodorized (RBD) palm oil. In 2021, India imported palm oil worth $3.9 billion from Indonesia and worth $4 billion from Malaysia.
The geopolitical tension has led to a spike in commodity prices such as fertilisers, crude oil, and metals that India imports from Russia and Ukraine. It is also affecting exports to Ukraine and Russia, as global shipping lines have suspended cargo shipments to and from Russia. Ports have also been shut down because of the rising freight rates.
