"Global palmolein prices may dampen somewhat due to government's decision to allow import of soft oils," Indian Vanaspati Producers' Association executive director Inder Ratan Mehra said.

Last week, the government had asked STC to speed up purchase of 52,000 tonnes of palmolein from the global market to make up for the edible oil shortage in the country following the ban on use of mustard oil.

The 52,000 tonnes, to be imported before October-end,was out of the 1.5 lakh tonnes of palmolein permitted for imports by government in August. So far, STC has procured 98,000 tonnes.

The government decision to speed up palmolein imports had led to sharp rise in global palmolein prices, thus refraining STC from making any purchase.

To tackle the situation, the CabinetCommittee on Prices on Tuesday decided to allow STC the flexibility to import other oils to tide over edible oil supply crisis in the country. The imported oil will be supplied through the public distribution system.

Chabbra said palmolein prices this year had been influenced initially by an export ban imposed by Indonesia, which later relaxed it after imposing a 40 per cent export duty.

He said edible oil prices were ruling high this year in view of a general supply shortage.

Malaysian Palm Oil Promotion Council country representative Ashema Raheja said India had timed its import a little late.

It had entered the global market when countries like China had entered the market for meeting their demand, she said.

China was expected to buy 1.5 lakh tonnes and Pakistan was also expected to make some purchase from the global market, though it would be to a lesser extent in view of its precarious trade balance position, Raheja said.

India's edible oil shortage this season (November 1997-October 1998)has been estimated to be 15 lakh tonnes against a demand of 78 lakh tonnes. Government expects private traders to import around 13.5 lakh tonnes, apart from the 1.5 lakh tonnes authorised for import by STC.

Government has also cut import duty for edible oil to 15 per cent in an effort to increase imports and curb rising prices of the commodity in domestic market.