Godrej Consumer, HUL And Others To Benefit From Indonesia Slashing Palm Oil Levy

Indian consumer companies like Godrej Consumer Products Ltd. and Hindustan Unilever Ltd. are likely to benefit from Indonesia's decision to slash palm oil levy.

"This is positive news for Indian consumer companies like Hindustan Unilever Ltd. and Godrej Consumer Products Ltd., as well as other consumer firms. This was anticipated after India recently increased the import duty," said Abneesh Roy, Executive Director of Nuvama Institutional Equities.

The Indian government had raised the import price of crude palm oil to $949 per tonne.

Indonesia, the world's largest palm oil exporter, has reduced its export levy to boost shipments of the commodity.

The levy has been set at 7.5% of the reference price, effective from Sept. 21, according to a Bloomberg report. The duty will be reduced from $90 to $63 per ton starting this month, while the levy on processed palm products will range from 3% to 6%.

As the world's largest importer and consumer of vegetable oils, India relies heavily on palm oil, which is a key ingredient in products ranging from foods like biscuits, chocolates, pizza dough, and instant noodles to cosmetics and hygiene items such as shampoo. It is an essential ingredient in manufacturing soaps as it helps in hardening the soap and promoting lather. Therefore, it is used by fast moving consumer goods companies in their manufacturing processes.

In July, palm oil imports in India surged to a seasonal high of 10.81 lakh tonnes, accounting for 57% of the country's total vegetable oil imports, according to data from the Solvent Extractors Association. The industry body also noted that the increased imports have led to port congestion and berthing delays of 8 to 10 days at Gujarat's Kandla port.

SEA data further showed that crude palm oil imports rose to 9.36 lakh tonnes from 8.41 lakh tonnes, while imports of crude palm kernel oil increased to 8,001 tonnes from 7,457 tonnes.

On Thursday, NDTV Profit reported that top executives from major food companies met with Union Commerce and Industry Minister Piyush Goyal and Minister of Food Processing Industries Chirag Paswan to raise concerns over the recent import duty hike on refined edible oils and its potential impact on sales.

One executive expressed concern, stating that if companies are unable to raise prices as mandated by the government, they could face substantial losses.