In the last two months there have been a few public statements by the Government in various platforms in the country that the duty on palmolein would be hiked once again, in order to support the domestic edible oil industry. But it is yet to take a firm decision on the matter. This is creating confusion in the Indian and Malaysian markets, for whom India is a major export market. Further, production in Malaysia is growing continuously, international imports are falling and Indonesia has entered the fray in the international market with lower prices ($5 per tonnes cheaper). According to sources in the industry, the Government is waiting for the results of the report it had commissioned to study the prospects of domestic oilseeds production this year. However, according to a statement made in the Parliament on Aug 7, 2000, domestic production is expected to be at 63.3 lakh tonnes, while the requirement is estimated at 108.74 lakh tonnes, leaving a gap of over 45 lakh tonnes. So far, between Nov 1999 and July2000, around 30.19 lakh tonnes of edible oil has been imported by India.However, on the earlier two occasions, the duty increase had not affected the import volumes. In fact, edible oil imports increased to 4.62 lakh tonnes in July this year, compared to 3.25 lakh tonnes in the previous month. This is because Malaysia, the main exporter of palmolein to India, introduced a corresponding drop in it prices from $320 to $350 per tonne to $290 to $300 per tonne since July this year, neutralising the duty hike.

Expecting the same to happen this time also, buyers are unable to make forward bookings in the last few weeks. Despite the onset of the festive season, the current stocks of palmolein in the country are estimated at only 2,00,000 tonnes (25,000 to 30,000 tonnes in Chennai), while it was over 4,00,000 tonnes at this time of the year in 1999. A lot of traders who had made forward bookings before June 2000, expecting prices to shoot up after the duty increase, had burnt their fingers, said `oilsandoilseeds.com' promoter PVR Krishna Rao.

Prices of RBD palmolein in the domestic market have moved up marginally last week to Rs 220 per 10 Kg, after stagnating at around Rs 210 per 10 Kg for two weeks at all the major edible oil wholesale trading centres including Mumbai, Chennai, Nagapattinam, Kakinada, Cochin, Managalore and Kandla.As around 60 per cent of the 45 lakh tonnes of edible oil imported into the country is RBD palmolein, the Indian edible oil market is heavily dependent on the developments in the Commodities and Monetary Exchange of Malaysia (formerly known as Kualalumpur Commodities Exchange), while the changes in Chicago Board of Trade (CBOT) have a bearing on the Malaysian markets.

The edible oil industry size in India is estimated at around Rs 15,000 crore. And the domestic production of oilseeds is expected to drop from 216.5 lakh tonnes in 1999 to 188.9 lakh tonnes in 2000, as per official sources.