27/09/2009 (Bloomberg) - Vegetable oil demand growth in India, the biggest buyer after China, may slow from a record pace fueled by an import-tax waiver that pared costs and stoked consumption in Asia’s third-biggest economy.

Demand may increase 4 percent in the year beginning Nov. 1, from a record 11.5 percent this year, said Govindlal G. Patel, director of Dipak Enterprises. Edible-oil purchases may be 7.8 million tons, less than the 8 million tons estimate, he said.

“This may be a one-time growth in consumption and we can’t expect such exorbitant growth in consumption in 2009-10,” Patel told an industry conference in Mumbai today. He has been trading vegetable oils for more than four decades.

India, which relies on imports to meet half its cooking oil requirements, ended import duty on crude palm oil in April last year, and in March lifted a 20 percent tax on crude soybean oil purchases. The two commodities are substitutes. Refined edible oils are taxed at 7.5 percent.

Vegetable oil imports in the 10 months ended August jumped 49 percent to 7.07 million metric tons, the Solvent Extractors’ Association of India said on Sept. 11. Purchases may reach 8.5 million tons by Oct. 31, 2.2 million tons more than a year ago, Patel said today.

Imports in the 2009-10 season may total 8.4 million tons, including 600,000 tons of non-edible fats, he said. That’s in line with 8.5 million forecast by the extractors’ association.

The South Asian nation buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.

Oilseeds output in the 2009-10 season may be little changed at 22.4 million tons as increases in soybean and rapeseed output help make up for a 14 percent drop in peanuts, Patel said.

Soybeans production may rise by 500,000 tons and rapeseed output may increase by 500,000-600,000 tons, he said.

Edible oil supplies from local oilseed harvests may rise to 6.86 million tons next season, compared with 6.35 million tons last year, Patel said. Stockpiles on Nov. 1 may be 1.17 million tons, 48 percent more than a year earlier, he said.