NEW DELHI (April 25 2003) : India, the world's largest importer of edibleoil, has cut the quantum of local oils used in making vanaspati orvegetable ghee, a move which traders said would lead to higher palm oilimports.

The minimum local oils content in vanaspati was reduced to 12 percent from25 percent effective from April 21, according to a government notificationobtained by Reuters on Thursday.

The decision would encourage higher inflows of imported oils for makingvanaspati as they are cheaper than domestic crude oils like rice bran,cottonseed and soyabean oil, traders said.

"Why use local rice bran oil when CPO (crude palm oil) is cheaper?" saidB.V.Mehta, executive director of Solvent Extractors Association of India.

Palm oil traders in Kuala Lumpur said the move could result in a boost forMalaysia and Indonesia, the largest exporters of palm oil.

"It will lead to additional imports of around 150,000 tonnes mainly crudepalm oil," said a New Delhi-based vegetable oil importer.

The country produces 1.2 million tonnes to 1.4 million tonnes of vanaspatiannually.

India buys palm oil from Malaysia and Indonesia and soyaoil fromArgentina, Brazil and the United States.

India's vegetable oil imports rose 20.6 percent between November and Marchto 1.57 million tonnes due to lower oilseed output resulting from a severedrought.-Reuters