KUALA LUMPUR (May 01 2003) - India, the world's largest edible oilimporter, on Wednesday reduced customs duty on RBD palm oil to 70 percentfrom 85 percent to remove the difference in duty structure among variousimported oils.

"I am proposing the removal of the high duty differential between importedrefined palm oil and crude palm oil by reducing the customs duty on RBDpalm oil from 85 percent to 70 percent," Finance Minister Jaswant Singhtold parliament.

But Malaysian exporters said the minister must have certainly beenreferring to RBD palm olein -- which can be used directly as cooking oilwithout the need for further processing.

"I am 99.9 percent sure that he must have been talking about RBD palmolein," said the export manager at an oils brokerage in Kuala Lumpur,specialising in sales to India.

"Olein was the most popular palm product into India until they changed theduty structure in 2000," he said.

India levies a basic import duty of 65 percent on crude palm oil and 45percent on soya oil.

Olein used to have additional duties which add up to more than a total of92 percent.

The differential tax structure was introduced by India in 2000 todiscourage inflow of foreign oils which it said was disrupting livelihoodof domestic oilseed farmers.

But a severe drought in India last year put paid to the plan and forcedthe government to depend on imports again.

Malaysia has always contented that India's tax regime for imported oilsgave an unfair advantage to soyaoil, palm's main rival.

Since 2000, crude palm oil (CPO) has been the main palm product flowinginto India because of its lower taxes.

Malaysia exports very little CPO, preferring refined products due to itshuge processing capacity at home.

The biggest CPO exporter is Indonesia.

"That's why this confusion on olein must be cleared because it can put usback into pole position over India," said a trader.