India ponders hike in palm olein duty

India ponders hike in palm olein duty

BOMBAY (Reuters): India's agriculture ministry on Wednesday said it had recommended a further hike in the import duty on palm olein after last month's rise, under pressure from a domestic industry hit by rising imports.

"My ministry has recommended a further increase in the import duty on palm olein and coconut oil to help our growers," Agriculture Minister Nitish Kumar told parliament in reply to a question.

In June, the Indian government, in a long-awaited move, raised import duties on edible oils but this fell short of market expectations and traders said imports would not be hit.

After last month's increase, the effective duty for RBD palm olein currently works out to 44 percent from the previous 33 percent, traders said.

India is the world's leading importer of edible oils.

Palm olein imported from Malaysia accounts for the bulk of those imports. Soft oils such as soy and sunflower imported from the United States, Brazil and Argentina account for the rest.

The Solvent Extractors Association of India is due to meet various ministries including the Agriculture Ministry and Consumer Affairs & Distribution Ministry on Thursday.

"We want the government to take note of falling oil prices which have badly hit oilseed farmers," said B.V. Mehta, executive director of the association.

"The majority of the solvent extraction plants have shut down in last few years. The industry is still bleeding," he said.

Traders said it would take time for various federal ministries to agree on the extent of the hike in duties.

A provision by Finance Minister Yashwant Sinha in the budget for the fiscal year to March 2001, allows for import duties on oils to be increased up to a ceiling of 100 percent.

Indian edible oil imports rose to 2.56 million tons in the first eight months of the 1999/2000 (Nov-Oct) oil year from 2.45 million in the year-ago period, data from the Solvent Extractors Association of India show.

Successive government moves to raise duties in recent months have not had much effect due to depressed world prices and the subsequent lowering of prices by major producers.

Indian imports of edible oils have risen due to a slump in local oilseeds production, soft global prices and fast-growing local demand.

Local edible oil prices are about 20 to 25 percent lower than the average price over the past nine years, industry officials said.

India imported 4.39 million tons of vegetable oils in 1998/99 against 2.68 million the previous year.