India not seen lowering edible oil import tariff

India not seen lowering edible oil import tariff

NEW DELHI (Reuters): Indonesian and Malaysian industry ministers will lobby India for lower duty on palm oil during their visit starting Monday but the world's largest oil importer is unlikely to oblige, industry officials said.

Indonesia's Trade and Industry Minister Luhut Pandjaitan and Malaysian Primary Industries Minister Lim Keng Yaik would hold meetings with India's finance, commerce and food ministries to seek duty at par with soyoil.

Malaysia and Indonesia, the world's number one and two palm oil producers respectively and traditional rivals, agreed in February to form a world palm oil association to help lift palm oil prices from 10-year lows.

"We do not expect any cut in duties because the prices are too low, and any fall in import duty will hit farmers and the domestic oil industry," a leading trader said.

In its federal budget in February, India imposed a steep import duty of 75 percent on crude palm oil (CPO) and 85 percent on refined palm oil.

The duties compare to 45 percent for crude soyoil and 50.8 percent on refined soyoil, driving buyers to switch to soyoil.

Indian traders said COP and refined palm oil prices have fallen in the last one month and any reduction would be "suicidal for the local industry".

"The CPO is down to $203 a ton and refined oil has also fallen. We do not see the import tariff coming down," a leading oil importer said from the western city of Ahmedabad.

"We rather want the government to increase duty on soyoil as a safeguard measure so that its import does not hurt prices," B.B.Mehta, Executive Director of Solvent Extractors Association of India (SEAI) told Reuters.

Analysts said India might consider a small reduction in palm oil duties if there are possibilities of counter trade of rice.

"We have huge stocks of rice and Indonesia has a demand of two million tons and if they agree to buy our rice then the government might consider their case," a Bombay-based commodity analyst said.

India had planned to export about two million tons of rice from government stocks, which were at 20.7 million tons in January this year.

But traders say the country was not likely to meet its target due to lower global prices.