Indonesia cracks down on illegal Indian groundnut imports
Following businessline’s report last week, Indonesia has begun to crack the whip on illegal exports of commodities such as rice, sugar, groundnuts, shallots, onion, garlic and chillies.
Local reports said at least 10 ships carrying these commodities were seized and held up at the Tanjung Balai Karimun Customs port. Indonesia papers picked up businessline’s report, leading to Prabowo Subianto’s government cracking down on the illegal trade.
Indonesia authorities have seized 1.45 million tonnes of rice, about one lakh tonnes of sugar, 67,218 tonnes of shallots, 44,640 tonnes of garline, 7,800 tonnes of onions, over 5,000 tonnes of dried chillies and some 1,700 tonnes of groundnuts (peanuts).
Indonesia’s Minister of Agriculture, Andi Amran Sulaiman, visited the Tanjung Balai Karimun Customs Warehouse, and saw the seized commodities.
High aflatoxin levels
Indonesia has now ordered law enforcement officers in the Riau Islands to track down the brain behind the illegal trade. Last week, businessline reported that though Indonesia has curtailed imports of groundnuts (peanuts) from India, the curbs are being overcome by increasing illegal shipments. The consignments reach Indonesia via Port Klang in Malaysia.
Global trade sources said that at least 90 per cent of groundnuts imported into Indonesia were carried out illegally after Jakarta lifted the suspension on Indian groundnut imports late in November.
Trade sources said that in November, over 825 containers, a huge volume, moved via Dumai illegally, and only 80 containers moved via the official port. In December, groundnut exports to Indonesia were 20 full containers officially, whereas illegal shipments were 225 full containers.
Indonesia suspended Indian groundnut exports in September after it found the level of aflatoxin in consignments higher than permitted level. An Indonesian team inspected Indian facilities of exporters and permitted the resumption of trade in November, but conditions stipulated, including the aflatoxin levels, were found too risky by Indian exporters.
Shippers list pruned
While permitting resumption of groundnut imports, Indonesia fixed the aflatoxin at 15 parts per billion (PPB). Trade sources said Indonesia does not have the facilities to check such levels of aflatoxin. Even the EU does not have such strict norms.
Jakarta also cut the list of groundnut exporters from India to 75. Data accessed by businessline showed that groundnut exports to Malaysia, which had never been above 6,500 tonnes until September 2025, began rising from October.
Imports to Malaysia surged in October to 8,300 tonnes (6,533 tonnes in October 2024), 15,800 tonnes in November (6,000 tonnes) and 15,000 tonnes in December (3,625 tonnes). Trade sources said this was a clear indication of illegal trading.
Between India and Malaysia, there are no strict rules, especially when Port Klang is described as a transit port. From there, barge and small boat operators take the goods in shipments of 20 containers to different places, including Dumai port, which is a major smuggling port of Indonesia.
Hawala trading
In the case of rice, Indian trade sources said the illegal route is giving way to hawala trading.
The illegal imports led to domestic groundnuts prices declining to 30,000-32,000 Indonesian rupiah a kg from 35,000 rupiah. (₹1= 186.33 rupiah). This includes the 5,000 rupiah that smugglers and boat operators charge buyers.
One of the problems this year with Indian groundnuts is the kharif crop being affected by rain during the drying period, particularly September-October. This led to higher levels of aflatoxins.
China is reported to be behind Indonesia’s move to curb groundnut imports from India. Last year, China asked its fellow ASEAN (Association of South-East Asian) members to tighten quality norms for groundnuts and buy more produce from it.
The Chinese message has also resulted in Thailand suspending groundnut imports from India.
In the 2024-25 fiscal, India exported 7.46 lakh tonnes of groundnuts, valued at $795 million. Of this, Indonesia accounted for over 35 per cent of this, importing 2.77 lakh tonnes valued at $280 million.
Published on January 20, 2026
