Indonesia's corn starch market is shaped significantly by its trade policies, which create distinct dynamics for imports primarily from India and China. These policies impact tariff rates, sourcing strategies, and supply chain operations, influencing the overall competitiveness of imported corn starch in Indonesia’s market.

Indonesia’s Tariff Policy and Its Impact on Trade

Indonesia imposes a 10% import tariff on corn starch originating from India, while corn starch imports from China benefit from preferential tariffs due to free trade agreements and broader diplomatic relations. This tariff disparity makes Chinese corn starch relatively more cost-competitive in Indonesia compared to Indian products.

The exclusion of Indian corn starch from preferential tariff lists such as the ASEAN-India Free Trade Agreement (AIFTA) restricts its market access and affects Indian exporters’ competitiveness. Trade bodies and Indian industry representatives have urged Indonesia to reconsider these policies to create a more level playing field.

Supply Chain Challenges and Market Implications

These unequal tariffs influence procurement choices by Indonesian manufacturers, who may favor lower-cost Chinese imports to optimize expenses. However, reliance on a single major supplier country could pose risks to supply chain stability due to geopolitical, climatic, or logistic disruptions.

The requirement by Indonesian authorities for physical document submissions, unlike India’s shift to digital certification, adds further delays and complexities in import processes. Addressing these administrative challenges alongside tariff adjustments could facilitate smoother trade flows and bolster bilateral cooperation.

Indonesia’s approach to corn starch tariffs exemplifies the balancing act between protecting domestic industries, managing international trade relations, and ensuring an efficient, resilient supply chain.

Understanding Indonesia's differentiated tariff treatment toward Indian and Chinese corn starch imports is crucial for stakeholders navigating trade policies, sourcing decisions, and supply chain strategies in the competitive starch market.