India, the world’s second-largest importer of edible oils, is expected to increase its palm oil imports in 2010 due to its growing middle-income population and mounting food inflation concerns.
A trader said India’s reluctance to reintroduce the import duty on crude palm oil (CPO), while retaining the 20% import duty on soybean, would help boost palm oil exports to the sub-continent next year.
“Without import taxes, India’s purchases of palm oil will remain strong,” he said.
The tax differential between CPO and soybean oil enhances the attractiveness of CPO, which is now trading at a US$200 per tonne price discount to soybean oil.”
In April 2008, India removed the duties on all vegetable oils to keep prices at bay following its soaring inflation rate.
However, it imposed a 20% duty on soybean oil last November after the global prices of edible oils fell.
Prior to India’s zero import duties regime, palm oil had been slapped with a 20% import duty.
Last year, Malaysia’s palm oil exports to India surged by 89.9% to 970,734 tonnes from 511,157 tonnes a year earlier.
India used to be the largest importer of Malaysian palm oil before being replaced by China in 2002.
However, industry experts and analysts said India would likely take over China’s position as the world’s largest palm oil importer by late-2010.
The Malaysian Palm Oil Board chairman Datuk Sabri Ahmad told StarBiz that India was interested in increasing its palm oil imports, mainly from Malaysia and Indonesia.
Sabri recently accompanied Plantation Industry and Commodities Minister Tan Sri Bernard Dompok’s trade mission to India.
India bought a record 8.66 million tonnes of vegetable oils as at October this year. Last year, it imported about eight million tonnes of vegetable oils, of which six million tonnes are palm oil.
Of the six million tonnes, about 1.5 million came from Malaysia and the remainder from Indonesia.
“During the recent trade mission, India Vanaspati Association had requested for more duty-free CPO from Malaysia, given the increasing vegetable oil refining capacity of about 10 million tonnes in India.
“This means more CPO needs to be imported next year,” Sabri said.
Malaysia last year raised its CPO export quota from 2.5 million tonnes to 3 million tonnes to accommodate the increasing world demand and high domestic stock level.
Sabri noted that Malaysia was more interested in helping India improve its oil palm plantations as well as encouraging Malaysian industry players to collaborate with Indian businessmen in downstream ventures like detergent and soap manufacturing operations.
India imports its CPO mainly from Indonesia while from Malaysia it imports mostly refined, bleached and deodorised palm olein (cooking oil).
Palm oil is the world’s most consumed vegetable oil.
For 2010, Malaysia is targeting a higher palm oil production of 17.7 million to 18 million tonnes while Indonesia has raised its forecast production to 22 million to 23 million tonnes.
Source : biz.thestar.com.my/news