Trade Competitiveness of Palm Oil Export from ASEAN Countries

Aims: To study the competitiveness, import intensity and structural break of palm oil exports from ASEAN member countries to the Indian market for the period 2000 to 2020.

Data and Methodology: The relevant data was collected from UNCOMTRADE for the period of 21 years (2000 to 2020). The tools used for the analysis were Revealed Symmetric Comparative Advantage (RSCA), Import Intensity Index (III) and Chow test.

Results: The study revealed that Indonesia had lost its comparative advantage due to differential tariff rates imposed by India between Indonesia and its close competitor Malaysia. After 2011, the import intensity index clarifies that there was a gradual decrease in imports from Indonesia. However, Malaysia and Thailand showed an upward trend in import intensity index till the year 2018. After 2018, Singapore had an upward trend in import intensity. From chow test, there was a significant difference in importing palm oil from ASEAN countries to India before and after signing AIFTA (ASEAN- India Free Trade Agreement).

Conclusion: Considering India’s demand for palm oil which is expected to double by 2030, so sustainable palm oil cultivation is recommended and a balanced approach should be taken to fix the tariff rate to protect domestic producers and refineries without compromising consumer demand.