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Government has no plans to cut vegoil import tariff

The government has no immediate plans to lower import tariffs on vegetable oils to keep oilseed prices steady ahead of the harvesting season, officials and traders said on Monday.

Domestic news reports and market talk at the weekend had said that India, the world's largest edible oil importer, was expected to cut import duties.

India has been under pressure to reduce its import tariff since February when it slapped its heaviest-ever duty of 75 per cent on crude palm oil and 85 per cent on refined palm oil.

"There is no such proposal or plan as of now," a ministry official, who asked not to be identified, told Reuters.

"But we are closely monitoring the situation," he said. A finance ministry official also confirmed there was no such move.

Traders said the government needed to keep oilseed prices steady before the beginning of the harvesting season.

"If the duty is reduced at this moment it will result in a fall in oilseed prices and that will be disastrous for farmers," Atul Chaturvedi, vice president of Adani Exports Ltd, said.

India is expected to produce a bumper oilseed crop due to timely and widespread monsoon rains in most oilseed-growing regions after a three-year gap, analysts say.

"This (local crop) will naturally result in lower prices as it will reduce dependence on imports," another trader said.

India buys around 450,000-500,000 tonnes of vegetable oil every month during the peak season, but imports could decline to around 200,000 tonnes if the country reaps a bumper oilseed crop, traders said.

Prices of refined bleached and deodorised palm olein have increased to around $355 a tonne ex-Malaysia from $250 a tonne around a month ago, traders said.

"These prices will come down once our crop comes in the market," he said.

Groundnut and soybean are India's main winter oilseed crops which are sown in June and July and harvested in September and October.

Some traders said they feared international edible oil prices could go up if India lowered its import tariffs.

"Our duty cut could lead to a bullish trend in the global oil market," a leading vegoil dealer said.

"The government should not take any decision immediately. It should look at the situation after the crushing of the local crop is over by January or February," he said.

In the first eight months of the year to October 2001, India's imports of edible oils rose to 2.97 million tonnes from 2.58 million in the year-ago period.

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