March 5 2004 - INDIA has raised the import duty on the base price ofsoyabean oil from US$643 (US$1 = RM3.80) a tonne to US$710 a tonne, butleft unchanged the base price for palm oil.

The base price for crude palm oil (CPO) in the import duty costcalculation is US$504 a tonne, and US$552 a tonne for palm olein.

The new base price makes soyabean more expensive to import in India but itstill pays lower tax than palm oil.

India can impose a maximum import duty of 45 per cent on soyabean oil, butis allowed to charge up to 300 per cent import duty on other edible oils,as part of the conditions to enter the World Trade Organisation (WTO) in1995.

Godrej International Ltd director Dorab E. Mistry said the new base pricesfor the edible oils are effective from Wednesday.

Foreign soyabean oil entering India is slapped with a 45 per cent importduty, while palm oil products import duty ranges between 60 and 80 percent.

There will be a positive impact on palm oil. But it will be a marginal onedue to the current duty structure, he told Business Times on the sidelinesof a palm and lauric oils conference and exhibition in Kuala Lumpuryesterday.

The annual two-day conference, which started on Wednesday, is organised bythe Malaysian Derivatives Exchange.

Dorab acknowledged that the existing edible oil import duty structure isdiscriminating to palm oil and there is very little that the IndianGovernment can do to alter the situation.

The Indian Government’s hands are tied following the pledges made when thecountry becomes a member of the WTO, he said.

Dorab said Washington has succeeded in getting India to agree to limit themaximum import duty for soyabean oil at 45 per cent.

On the current firm prices of palm oil, Dorab said there is still anupside potential for the commodity following poor soyabean production inSouth America.

I expect CPO futures price to peak to RM2,200 a tonne by April this yearbefore entering a correction period in May or June. It will rise again inJuly, he added.

India is expected to consume some 2.05 million tonnes of soyabean oil and4.5 million tonnes of palm oil this year.