17/08/04, KUALA LUMPUR (Dow Jones)--The Indian government is unlikelyto revise palm oil import duties anytime this year, despite recentspeculation of a possible reduction in the duties, a senior industryofficial said Tuesday.I.R. Mehra, executive director of the Indian Vanaspati Producers'Association, said he doesn't expect the government to announce a change inimport duties for palm oil barely one month after it had unveiled itsbudget."There is going to be no change in the duty structure because thebudget is already over," he said.This year's budget was presented by India's new government in mid-Julyand featured a hike in refined palm oil duties to 75% from 70% previously.However, there have been rumors in recent days that the governmentmight cut import duties on a range of commodities, including edible oils,as part of efforts to curb rising inflation."There has been some talk that duties should be lowered on importsbecause prices are going up. But the government is not amenable to that.They feel it is OK and prices are within reasonable levels," Mehra said.Any revision in duties would only be likely in February 2005, when thegovernment is scheduled to present its next budget, he said.Rumors of a potential reduction in import duties has helped supportpalm oil prices in the past few days.At 0750 GMT, the benchmark November CPO contract was at 1,461 ringgit($1=MYR3.8) a metric ton, unchanged from Monday's close.

CAROTENE ISSUE STILL A MAJOR PROBLEM

Mehra said the government's carotene content specification on crudepalm oil was a bigger concern among edible oil industry participants.In August 2003, the government imposed restrictions on imports of CPO,specifying that every kilogram of CPO must contain at least 500 miligramsof beta-carotene.CPO imports that failed to meet the criteria would be charged dutiesat rates applicable on refined palm oil.It is widely known in the industry that most CPO entering India can'tmeet the 500 mg requirement.As a result, importers have had to pay a refined palm oil duty rate of75% instead of the 65% for CPO."The outstanding problem is still the carotene content on CPO. CPO isattracting 75% duty when we should be paying 65%," he said, adding thatthe duty differential works out to around 2,400 rupees ($1=INR46.28) aton.Mehra said so far, there have been no indications from the governmentabout a possible revision of the specification."There's been nothing specific so far. The industry is going onrepresenting their (concerns) again and again," he said.

OILSEEDS CROP SEEN LOWER THIS YEAR

Meanwhile, the edible oil industry in India is keenly awaiting thegovernment's report on the progress of the country's oilseeds productionamid concerns about potential crop damage.Weather conditions during the monsoon season, which runs from June toSeptember, are crucial to India's oilseeds crop.Poor rainfall in July had fueled concerns that oilseeds output wouldfall, although those fears have been eased by a return of rains thismonth.However, the industry is now concerned that there may be too much rain, Mehra said."Gujarat, which is a main oilseeds growing region, has received somuch rainfall that it is causing floods. So it can be a problem as well,"he said.Participants are waiting for official figures from the government, butare already bracing for lower domestic oilseeds production in the comingmarketing year."Definitely, this year's oilseeds crop is going to be lower than lastyear's. That's for sure," he said."That would result in higher imports of oils."Mehra didn't provide specific forecasts. Last year, India harvested arecord oilseeds crop of about 25 million tons.According to the latest statistics, India had 15.4 million hectares ofland planted with oilseeds as of Aug. 12, up from 13.8 million hectares asof Aug. 12, 2003. However, unfavorable weather is expected to reduceyield, affecting overall production.Mehra said the impact of the weather and import duties, as well as theoutlook for global oilseeds and edible oil prices, are among the majorissues that would be discussed at an industry conference due to be held inMumbai Sept. 25-26.