18/03/2009 (Market Watch), New Delhi - A government panel will likely soon consider cutting the 20% import tax on soyoil, people familiar with the matter said Wednesday.

In India, consumption of edible oil has been on the rise due to a fall in global prices. In February, soyoil imports rose by 88.5% to 153,887 tons from 81,634 tons due to the price drop.

Palm oil imports into India have a tax advantage as crude palm oil imports are tax free and refined palm oil is taxed at 7.5%. Sunflower oil imports are also tax-free.

The government panel of ministers will also consider allowing tax-free imports of refined sugar and amending rules for the export of non-basmati rice of upto 2 million metric tons.

The panel will revisit an earlier decision on non-basmati rice exports to facilitate government-to-government exports through diplomatic channels, the sources said.

The panel earlier this month allowed the imports "in principle," but the mechanism was short on details.

"The earlier decision was to allow export of non-basmati rice by private traders to government, but it is likely to be expanded," one official said.

In 2007, India banned exports of non-basmati rice to boost local supplies and contain price rises. However, with a good rice crop and comfortable foodgrain stocks, the government relaxed the ban and decided to allow exports later this year.

The panel is likely to consider allowing tax-free imports of refined sugar to bridge a shortfall in supplies as the government has estimated a fall in sugar output to 16.5 million tons in the crop year to September 2009 from 26.5 million tons a year earlier.

"At this point in time, the domestic price parity for imports is not there," another federal government official said as sugar prices have softened after the government imposed stock limits that discourage hoarding by traders.