India and Argentina sign MoU to improve soyoil, sunoil trade

India and Argentina – respectively the world's biggest vegoil importer and largest soyoil exporter – have signed a Memorandum of Understanding Tuesday to facilitate the soyoil and sunoil trade by reducing trade barriers.

The MoU was signed by the Solvent Extractors’ Association of India (SEA) and the Chamber of Vegetable Oil Processers and Association of Grain exports (CIARE-CEC) as part of a state visit by Argentina’s President Mauricio Macri.

They key aim of the MoU is to promote preferential tariffs on Argentina's edible oils exports into India by lobbying with governments, industry bodies and other stakeholders, for the mutual benefit of both nations, the SEA said.

Both countries will also increase their information sharing on the relevant industries, markets and technologies, and host a number of conferences to promote the Argentinian vegoil trade.

India’s fine line on tariffs

India imports around 15 million mt of vegoils a year, of which around 3 million mt is soyoil, 2.5 million mt is sunoil and the balance is palm oil imports, with those figures only set to rise further as its demand increases.

However, India sets high tariffs on vegoil imports in order to give its domestic oilseed farmers and crushers the edge over cheap imports, while controlling food inflation and gaining support with the large farmer base in India.

Those tariffs on soft oils, such as soyoil and sunoil, were hiked last June from 35% to 45% for refined oils and from 25% to 35% on crude oils, in a move welcomed by India’s domestic oilseed industry.

But at the start of this year, the government cut import tariffs on crude palm oil from 44% to 40% for Southeast Asian (ASEAN) countries with the 54% tariff on refined palm oil cut to 50% for Indonesian and to 45% for Malaysian.

Despite the cut being anticipated as part of an eight-year old bilateral deal with ASEAN, the move was unpopular and seen as a further blow to the popularity of India’s Prime Minister Narendra Modi.

India is set to go to the ballot box for general elections this May.

Correction: This article has been corrected to Prime Minister Narendra Modi in the second to last paragraph. It previously said President.