``It will certainly affect exports to India, but at what magnitude we have to see over the next two to three months,'' said an international trading manager at Pacific Inter-Link Sdn Bhd, Nakul Rastogi. Prices of palm oil in Malaysia, the world's largest producer, fell on Monday on the Indian news, with third-position March futures down 12 ringgit at 1,164 ringgit a tonne at midsession. Traders expect prices to remain under pressure in the near term. India on Thursday raised the import duty on refined edible oils to 27.5 per cent from 16.5 per cent to check a surge in imports and help the country's domestic refining industry. But it kept the duty on crude edible oils unchanged at 16.5 per cent.

India had previously charged a flat rate of 16.5 per cent on both refined and crude edible oils. India was the biggest buyer of Malaysian palm oil in 1999, taking about 2.3 million tonnes or a quarter of Malaysia's total exports, industry sources said. In December, India took 2,34,064 tonnes of refined palm oil from Malaysia.

A sharp drop in prices on the back of oversupply had prompted strong Indian buying last year. Pacific Inter-Link's Rastogi said the duty hike on refined oil would help boost imports of crude soyoil and crude sunflower oil but not crude palm oil. He said India did not have proper refining facilities for crude palm oil. ``Unlike China which has a huge noodle industry, India can do without palm olein,'' he said. Traders said prices of palm oil would need to come down in order to compete with soft oils.

Malaysian palm olein is currently priced at a $35 a tonne premium to soyoil, traders said.

Indian traders said they were bracing for a further increase in the import duty on refined edible oils, adding that they were expecting it to be raised to at least 40 per cent.