23/08/2012 (Reuters) - India's vegetable oils industry has urged the government to press China to lift a ban on imports of Indian rapeseed meal, the chief of an industry body said on Wednesday, ahead of a visit next week by the Chinese trade minister.

Until March last year, India used to supply half of China's rapeseed meal import needs and Beijing took about 11 percent of the total oilmeal exports of Asia's largest supplier.

But China imposed a ban on rapeseed imports from the start of this year after having said last year that it had found traces of malachite green, a hazardous chemical, in shipments from India and Malaysia.

"The Association has requested the Ministry of Commerce to raise the matter regarding lifting of the ban imposed by China on India's rapeseed meal during bilateral talks," Sushil Goenka, president of the Solvent Extractors' Association, said in a statement.

China imports about 1.2 million to 1.4 million tonnes of rapeseed meal each year, from suppliers including the United States and Pakistan.

LIFT REFINED PALM OIL FREEZE
The Indian government should also lift a freeze on the base import price, or tariff value, of all refined palm oils, Goenka added, to help the domestic refining industry.

India, the world's top vegetable oil buyer, has already lifted the freeze on the base import price -- used to calculate import taxes -- on RBD palmolein, making imports of the refined palm oil costlier as it seeks to protect domestic refiners from cheap Indonesian imports.

"Aligning the base import price to the market price will make imports of refined palm oil more costly, but crude edible oil varieties will be unaffected as they are allowed at zero duty," said Prasoon Mathur, senior analyst with Religare Commodities.

The trade body, based in the financial capital, Mumbai, also warned against any move to impose a ban on overseas sales of oilmeal, which the animal feed industry has sought.

"A situation like this would lead to larger import of edible oil and higher prices of oilmeal in the domestic market," Goenka said, by discouraging farmers from growing oilseeds.

India last month removed its duty on imports of oilcake to ensure supplies of cheap foreign meal to the feed industry amid growing fears that a drought threatened domestic supply.

India imports around 9 million tonnes of cooking oil each year, about 75 percent of which is palm oil sourced from Indonesia and Malaysia. The country also buys a small quantity of soyoil from Argentina and Brazil.

Expectations of an export ban gathered strength after India this month banned exports of edible oil in branded consumer packs popular with expatriates, in a largely symbolic move to rein in cooking oil prices at home.

The industry wants the government to allow sales of up to 25,000 tonnes of edible oils in branded packs from Nov. 1. Prior to the ban, India allowed exports of up to 10,000 tonnes of edible oil in the branded packaging.