India Won’t Impose Tax on Crude Palm Oil Imports

By Pratik Parija

Jan. 21 (Bloomberg) -- India, the world’s largest buyer of vegetable oils after China, ruled out import taxes on crude palm oil as prices of domestic oilseeds stay above the assured rates the government pays farmers.

Domestic oilseed prices are rising, farm minister Sharad Pawar told reporters in New Delhi today. India scrapped import duty on crude palm oil in April to bolster domestic supplies.

India’s plans to extend duty-free imports may help support this month’s rally in palm oil prices in Malaysia, the second- biggest producer of the commodity. Futures slid by half in the second half of 2008 as production exceeded demand.

Palm oil for April delivery declined 0.6 percent to 1,816 ringgit ($502) a ton on the Malaysia Derivatives Exchange at the 12:30 p.m. trading break today.

India more than doubled its palm oil imports last month as prices declined amid expectations of government slapping duty on crude palm oil imports. The South Asian nation imported 719,125 tons of edible oils in December, up from 276,782 tons in the year-ago month, the Solvent Extractors’ Association said.

Crude palm oil imports in December almost doubled to 486,936 tons from a year earlier, extractors’ association said.

India imposed a 20 percent duty on crude soybean oil imports in November to shield oilseed growers from duty-free purchases, while allowing crude palm oil at zero duty.

Separately, Pawar said there’s no plan yet to resume futures trading in wheat and rice.

B.C. Khatua, chairman of the Forward Markets Commission, the commodity market regulator, said Jan. 20 that he would write to the federal government seeking an end to the two-year ban as record harvests cool domestic food prices.

To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net;