India, Indonesia palm oil groups sign pact to deepen economic ties

New Delhi: The Indian Vegetable Oil Producers' Association (IVPA) and Indonesian Palm Oil Association (IPOA) on Thursday signed a three-year pact here to deepen economic ties and ensure food security.

The memorandum of understanding aims to strengthen collaboration in the palm oil sector, which forms the backbone of the edible oil trade between the two nations.

India imports over 60 per cent of its edible oil requirements, with Indonesia serving as its largest palm oil supplier for more than a decade, according to industry body SEA India.

The agreement formalises this relationship, while focusing on sustainable practices and stable supply chains.

"Today's MoU signals our shared commitment to a future-ready, transparent palm oil supply chain that benefits consumers and producers alike," said Sudhakar Desai, President, IVPA, at the signing ceremony.

The agreement outlines five key areas of cooperation -- technical exchange and research & development, sustainability initiatives, policy coordination, food security measures, and market intelligence sharing. Both associations will focus on promoting certified sustainable palm oil while including smallholder farmers in the value chain.

M Fadhil Hasan, Head of Foreign Affairs, IPOA, emphasised Indonesia's commitment to supporting India's food security goals.

"We look forward to advancing India's food security and climate goals through a reliable, responsibly sourced palm oil supply," he said.

Speaking at the conference, Hasan added that palm oil remains vital to Indonesia's economy.

"Through ISPO certification, forest conservation measures, and responsible production, we aim to support India's food security and climate goals. While challenges like smallholder compliance remain, this partnership will drive innovation and inclusive policies for a resilient supply chain."

IPOA Chairman Eddy Martono highlighted the strong bilateral trade relationship between the countries.

"In 2024, our bilateral trade reached USD 26 billion, including USD 20.3 billion in exports from Indonesia to India and USD 5.7 billion in imports from India, leading to a trade surplus of USD 14.6 billion in Indonesia's favour. Palm oil and its derivatives alone accounted for USD 4.4 billion, highlighting its key role in our economic ties," Martono said.

Globally, palm oil accounts for 39.5 per cent of vegetable oil production, with Indonesia contributing 58 per cent of global exports. The Indonesian palm oil industry spans 16.38 million hectares, 7.4 per cent of the country's land area, with private firms holding 52.3 per cent, smallholders 41.3 per cent, and state enterprises 6.4 per cent.

The agreement is supported by ongoing engagement between the Indian Ministry of Commerce & Industry and the Indonesian Ministry of Trade, complementing India's National Edible Oil Mission and Indonesia's export decarbonisation goals.

A bilateral working group will oversee the MoU's implementation, provide annual progress reports, and represent joint positions on global platforms.

The partnership is expected to enhance supply chain resilience while advancing sustainability goals in the palm oil sector.