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The Limits of Indonesia and India Trade Cooperation: The Case of Import Tariffs on Refined Palm Oil 2019–2020

Published online by Cambridge University Press:  07 March 2022

Moch Faisal Karim Open the ORCID record for Moch Faisal Karim [Opens in a new window]  and
Claeri Tiffani
Moch Faisal Karim*
Affiliation:
Bina Nusantara University, Indonesia
Claeri Tiffani
Affiliation:
Bina Nusantara University, Indonesia
*
*Corresponding author. Email: faisal.karim@binus.ac.id
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Abstract

This article examines limitations present in India–Indonesia bilateral trade relations. Since January 2019, India has imposed higher import tariffs on Indonesian refined, bleached, deodorised palm oil (RBDPO) than those imposed on Indonesia's main competitor Malaysia. This tariff policy weakened Indonesia's exports, given that India is Indonesia's third-largest export destination for palm oil. To overcome these tariff disparities, the Indonesian government responded with a trade-off strategy, offering to lower its import tariffs on India's raw sugar in exchange for a reduction in India's import tariffs on Indonesia's RBDPO. However, this strategy has thus far failed to generate a satisfying outcome for Indonesia. This article examines the obstacles in enacting such a strategy from the Indonesian perspective. By mobilising the concept of reluctance in international politics, this article argues that India's reluctance hinders Indonesia's trade-off strategy. This reluctance is evidenced by India's hesitation and recalcitrance, resulting in delays, and reversal of policy as well as ignoring Indonesian requests regarding the trade-off strategy. This could indicate that India does not prioritise Indonesia in its Indo-Pacific vision, particularly in enhancing cooperation with Southeast Asian nations, particularly Indonesia.

Keywords

Trade-offpalm oilRBDPO import tariffreluctanceIndia-Indonesia relationseconomic diplomacy
Type
Original Article
Information
TRaNS: Trans-Regional and -National Studies of Southeast Asia , Volume 11 , Issue 1 , May 2023 , pp. 31 - 43
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Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of Institute for East Asian Studies, Sogang University

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