25/8/06 KUALA LUMPUR (AFP) - India proposed striking a separate deal on palm oil imports with Malaysia and Indonesia in a bid to speed up free-trade talks with ASEAN and meet a year-end deadline.

Palm oil has proved to be a divisive topic in the talks, and by separating the issue from the rest of the trade negotiations it could allow the deal to go ahead without being held hostage to single issue.

"I am happy to have a separate palm oil agreement," India's Commerce and Industry Minister Kamal Nath told reporters at regional economic talks in the Malaysian capital on Friday.

Association of Southeast Asian Nations (ASEAN) members Malaysia and Indonesia produce about 80 percent of the world's supply of crude palm oil.

India currently imposes 70 percent tariffs on crude palm oil and 80 percent on refined palm oil.

Nath said the tariffs do not put palm oil at a disadvantage against soya bean or other edible oils as it was still the preferred oil in India and that imports of palm oil rose 30 percent last year to 3.3 million tonnes.

"The import of palm oil is not a market access issue, irrespective of tariffs," he said.

India, which adopted a free market economy in the early 1990s, is keen to expand trade ties with ASEAN, but wants to protect its own sensitive agriculture and textile sectors which provide livelihoods to millions of Indians.

The trade pact is scheduled to come into force on January 1, 2007, but ran into problems over India's reluctance to cut down a long list of products it wanted exempted from tariff cuts.

ASEAN and India on Thursday agreed to resume the stalled talks, although Malaysia indicated that several prickly issues remain in dispute.

Malaysian Trade Minister Rafidah Aziz, who is representing the region in the India trade talks, has complained that India had permanently excluded some products of interest to ASEAN, including wooden furniture and agricultural goods.

She also criticised its proposal to reduce tariffs on palm oil products over 16 years.

"Is 2022 a reasonable time frame for palm oil tariffs to be cut? We think that it should be advanced further," she said.

Gopal Pillai, special secretary with India's commerce and industry, said a separate deal on palm oil with Malaysia and Indonesia "could speed up" the ASEAN negotiations