New govt to avoid palm oil duty hike: Sources.

NEW DELHI/KUALA LUMPUR: The new government will not raise duties on palm oil in the short-term, despite demands by domestic oilseed processors to cut cheap imports from the world's top producer Indonesia, official sources said on Wednesday.

India is the world's leading cooking oil importer and Prime Minister Narendra Modi's government is expected to adopt policies to promote domestic oilseed production, but concerns over inflation mean it will not act quickly to raise import duties, said one of the sources with the federal food ministry.

"No duty hike will take place this month as the Budget is due in the first half of July," he told Reuters.

A decision to put a hold on any duty increase by India, the world's biggest palm oil buyer, could help reduce bearish sentiment and lend support to global palm prices.

"India holding to import duty structure will help stabilise Malaysian palm oil prices," Sandeep Bajoria, chief executive of Mumbai-based brokerage Sunvin Group.

The benchmark palm oil contract on Bursa Malaysia Derivatives has been running through a bearish phase since the start of the year losing nearly 10 percent, mainly on a stronger Malaysian ringgit and losses in rival soy oil.

India levies 10 percent duty on refined cooking oil imports and a 2.5 percent tax on all variants of crude edible oils.

Indonesia has structured its export duties in such a manner that they attract lower rates on the refined variants, squeezing processors' margins in India.

Half of India's annual demand of 17-18 million tonnes of cooking oil is met via imports of palm oil, while it also buys around 1 million tonne each of soy oil from Latin America, and sunflower oil from Black Sea nations.

Source : economictimes.indiatimes.com