Indonesia is interested in buying sugar from India but wants latter to cut import duty on refined palm oil and the sweetener substantially to 45 per cent and 5 per cent, respectively, according to sources.
An Indian delegation is scheduled to visit Indonesia this week to negotiate trade between the two nations for these two commodities.
While India is the world's largest sugar producer with huge quantity of exportable surplus, Indonesia is a major producer of edible oils, particularly palm.
According to sources, India is in talks with various countries including China and Indonesia to export surplus sugar and help mills clear cane arrears to farmers.
The Indonesian government is believed to have communicated that it was "not averse" to a bilateral arrangement with India on palm oil and sugar but it would take a long time to bring changes to the existing law for facilitating trade, the sources said.
Instead, Indonesia has suggested a trading arrangement under the India-ASEAN free trade agreement (FTA) so that import duty on refined palm oil and sugar is harmonised to 45 per cent and 5 per cent, respectively, to facilitate trade, the sources added.
Indonesia has argued that the Comprehensive Economic Cooperation Agreement (CECA) between India and Malaysia will come into effect from January next year that provides for a preferential import duty of 45 per cent on refined oil as opposed to
50 per cent duty under the India-ASEAN FTA.
At present, India levies import duty of 54 per cent on refined palm oil, 44 per cent on crude palm oil and 100 per cent on sugar.