Talk has resurfaced in the Kuala Lumpur market that India, one of Malaysia's main palm oil buyers, might soon raise duties on edible oils.

"I don't see any scope for restructuring of duties since there is a genuine shortage of not less than 4.0 million tonne of edible oils," said a Mumbai-based commodity analyst.

"There will be a lower oilseeds crop. If they raise duties further, it will lead to inflationary pressures," the analyst said.

Industry officials said that although local producers had been lobbying for an increase in duties, oils had a high weighting in the consumer price index so lower prices for them were desirable to check inflation.

They expected the government to propose measures to reduce the gap in duties between crude and refined oils.

Traders expect that the oilseeds crop, to be harvested in March, will be hit by a drop in rapeseed/mustard output due to low rainfall in Rajasthan, Madhya Pradesh and Gujarat.

Vegetable oil import duties in India, the world's leading edible oils buyer, have been increased three times since December 30, 1999. The last increase was in November but traders said it had failed to stop the flow of imports.

Producers said prices of most vegetable oils were now lower than before the increases and duties needed to be raised again to save the industry.

In November, the duty on refined palm oil and RBD palmolein was raised to 65 per cent from 35 per cent, and on refined oils sold in loose or bulk form to 45 per cent from 35 per cent.

The basic duty on crude palm oil for making vanaspati was raised to 25 per cent from 15 per cent. On crude palm oil for non-vanaspati making, it was raised to 55 per cent from 45 per cent. On crude vegetable oil, except coconut and palm oils, it was increased to 35 per cent from 25 per cent..

(Reuters)