Paper short abstract:

The exploration of the dynamics of India's and China's relationships with their supplier base derived from palm oil industry. Ensuing in detailed accounts of how India and China govern regional palm oil value chains and its implication on the promotion of sustainable palm oil in Indonesia.

Paper long abstract:

Most of the literatures that have extensively discussed the emergence of China and India in global economy view both economies as the supplier base in the global value chains. Very little illustration has been created about the role of these emerging countries as buyers; and how they govern regional value chains. This paper explores the dynamics of India's and China's relationship with their supplier base by collecting an empirical dataset on palm oil industry in Indonesia. At present, much of the discussion on Indonesian palm oil has been focused on the sustainability within the nexus Indonesia-Europe at the market-driven initiative of Roundtable on Sustainable Palm Oil (RSPO). Recently however, there has been a growing awareness of the increasing importance of China's and India's role as the two largest importers of Indonesian palm oil. It has been found that the governance of regional palm oil value chains led by buyers from India and China is generally less intense compared to Europe. The aforementioned phenomenon reflects particularly in the lower level of the requirements on sustainable production. The still urgent national interest of India and China to feed their people compel them to reckon price, quality and food security over sustainability issues. That evidence provides both threats and opportunities for the sustainability of Indonesian palm oil industry. The aim of this paper is mainly to highlight on the opportunities for Indonesia to establish a producers-driven initiative for promoting sustainable palm oil and to obtain its recognition within regional value chains.