By Thomas Kutty Abraham

April 29 (Bloomberg) — India, the world’s second-biggest vegetable oil buyer after China, may increase imports 16 percent this year after the government cut import taxes to cool prices, Dorab Mistry, director of Godrej International Ltd., said.

The nation will import as much as 6.5 million metric tons of vegetable oils in the year to October compared with 5.6 million tons a year earlier, Mistry said in a phone interview from London. India’s government could scrap a 7.5 percent import tax on refined edible oils if prices rise further, he said.

More demand from India may boost palm oil in Malaysia and soybean oil in Chicago. The price of palm oil, used in cooking and biofuels, has fallen 24 percent from a record 4,486 ringgit ($1,425) a ton on concern supply may rise from Malaysia, the second-biggest producer, and U.S. soybean sowings may grow.

“The availability of cheap imported oils in India will boost consumption and people will prefer imported oils to local oils, which are more expensive,” Mistry said. “The oilseed availability in India is not all that encouraging either.”

India, which buys almost half the vegetable oil it needs from overseas, scrapped the import duty on crude soybean and palm oil, and lowered the levy on refined edible oil to 7.5 percent on March 31 to curb inflation that has risen to the highest in more than three years.

The government has asked state-run companies that have begun importing edible oils to sell to the poor at subsidized rates to cool prices.

Increasing Imports

India’s imports of palm oil and soybean oil may be as high as 570,000 tons in May and June and could increase to as much as 700,000 tons a month starting July, Mistry said yesterday.

The South Asian nation imported 421,686 tons of soybean oil and palm oil in March, 33 percent more than the 317,930 tons a year earlier, according to the Solvent Extractors Association, a Mumbai-based processors group. Vegetable oil imports in the first five months of the year beginning November jumped 38 percent to 2.26 million tons.

The nation imports palm oil, typically used as cooking oil or in soaps, from Indonesia and Malaysia, the biggest producers. The tropical oil is the world’s most-consumed vegetable oil and can be mixed with diesel to stretch fossil fuel supplies.

Palm oil for July delivery on the Malaysia Derivatives Exchange, the benchmark for the commodity, fell as much as 3.2 percent today to 3,399 ringgit a ton.

Mistry expects palm oil prices to reach a record 4,500 ringgit a ton between September and March as the peak production season in Indonesia and Malaysia ends.

“You might see palm oil moving a little sideways in the next couple of weeks and as the high production cycle ends prices could move up,” Mistry said. “Weather during the growth of soybeans in July and August in the U.S. will be key to prices for both soybean oil and palm oil.”

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