12/22/04 - Indian palm oil industry is against any cut in import duty onthe commodity and has sought 'plantation crop' status for oil palmcultivations in the country, a senior industry official said Wednesday. Hesaid an impetus to domestic oil palm cultivation will help meet shortfalland reduce foreign exchange outflow for imports.

Oil palm are trees whose fruits are used for extracting palm oil andcurrently the total area under the crop is only around 60,000 hectaresagainst a nationwide acreage potential of 800,000 hectares.

"If indigenous oil palm cultivation is to be given a boost, cheap importsof palm oil on a large scale should be discouraged. There should not beany cut in import duty on palm oils from the current levels," Oil PalmIndia Ltd. Managing Director O.V. Joy told.

Government imposes a 65% duty on crude palm oil and the tariff on refinedbleached and deodorized palmolein oil is 75%.

Kerala-based Oil Palm India Ltd. is the largest public sector palm oilmanufacturing company in the country. It has a capacity to process 22.5tonnes fresh fruit bunches of oil palm every hour.

Joy said given the current deficiency in domestic production, imports area must but there should not be a flood of inflow from abroad as it wouldbe detrimental to the oil palm growers in the country.

His comments assume significance as the Malaysian Prime Minister AbdullahAhmad Badawi is currently on a five-day visit to India. Malaysia isworld's largest producer of palm oil with an annual output of over 13million tonnes.

It has been a long-standing demand of Malaysia that India cut its importduty on palm oils in line with that of soya oils. Tariff on soyabean oilis 45%.

Joy said growers were being paid 5,000 rupees per tonne of fresh fruitbunches, delivered at the factory but when global palm oil prices hadfallen in 1999-2000, they were getting less than 2,000 rupees a tonne.

He said this had even led to uprooting of oil palm plantations in TamilNadu and significantly brought down the acreage under the crop.

There is a large potential to grow oil palm in the country waiting to betapped but it would necessitate changes in government policies includinggranting it the official status of a "plantation crop".

He said currently if area is shifted from plantation crops to othercommodities, state governments hold the right of expropriating it underthe Land Ceiling Act. This is aimed at discouraging growers from switchingover from tea, coffee, rubber or spices plantations to other crops.

Joy said it had become a major deterrent in bringing more area under oilpalm cultivation.

"Unless there is a significant plantation shift towards oil-palm fromother crops, domestic production will not pick up," he pointed out.

Central government has allocated 110 million rupees in 2004-05 fiscal forthe oil palm development programme with a target to bring 10,000 hectaresunder the crop.

India's annual palm oil production is only around 20,000 tonnes againstaverage imports of over 3.0 million tonnes. Oil Palm India produces about7,000 tonnes using fresh fruit bunches from 4,000 hectares.

Joy said if the cultivation potential of 800,000 hectares is realised,palm oil production will rise to 2.5 million tonnes resulting in a cut inimport bill by at least 60 billion rupees.