03/12/2009 (Bloomberg) - India, the largest consumer of edible oils after China, may retain duty-free status for crude palm oil imports as food inflation concerns mount, said Thomas Mielke, chief executive of industry publication Oil World.

“Food inflation is already an issue in India,” Mielke said at a conference in Bali. “That is supporting palm oil in the near term because it is very unlikely the Indian government will introduce import taxes, as it will raise import prices.”

India bought a record 8.66 million metric tons of vegetable oils in the year ended Oct. 30, 2009, with palm oil making up 80 percent of the total, the Solvent Extractor’s Association Ltd. said last month. Prices of palm oil have soared 46 percent this year in Malaysia, the industry benchmark.

India abolished import duties on crude palm oil in April last year, and in March this year lifted a 20 percent tax on crude soybean oil purchases. Refined edible oils are taxed at 7.5 percent. The association Dec. 1 said the duties must be restored to prevent a glut of cheap imports.

Without import taxes, Indian purchases of palm oil will continue to be strong, Mielke said.

India’s government may need to tighten monetary policy to help contain a spillover from food-price inflation, the prime minister’s chief economic adviser Chakravarthy Rangarajan told reporters in New Delhi today.

“The persistence of high food-price inflation has a tendency to spread to manufacturing inflation,” he said.

India’s primary articles index, with 22.02 percent weight in the wholesale-price inflation basket and comprising mainly of food items, rose 12.53 percent in the week to Nov. 21 from a year earlier, the government said today.