Indian FMCG players, particularly food and snacks manufacturers, have said they are concerned about Indonesia's move to ban exports of crude palm oil, though some of them expect the decision is likely to have only transitory impacts on a short-term basis.
Several industry leaders hint that they will reduce their reliance on palm oil in phases and shift to alternatives such as rice bran oil and cottonseed oil for food products.
Last week Indonesia, the world's largest palm oil producer, banned shipments of crude palm oil (CPO), adding to the previous sanctions on refined oil, to soften the prices in its domestic market.
However, the Indian industry and experts expect the impact of this will be transitory in nature as Indonesia consumes only around one-third of its palm oil output.
India Ratings and Research (Ind-Ra) "believes that the ban is unlikely to sustain for a long duration, given that Indonesia consumes less than 40 per cent of its total palm oil production, resulting in the impact being transitory".
India is the world's largest importer and second-largest consumer of palm oil, which accounts for around 30 per cent of the country's edible oil consumption, said Ind-Ra.
Expressing similar views Mayank Shah, senior category head at Parle Product, said palm oil is perishable and eventually they (Indonesian exporters) would have to open up. Their production is much higher than the local requirement.
"Hopefully, there could be some reversal in this in the next 10 days as it is not possible for them to continue with the ban for a longer time," Shah told PTI.