<p>India, the world's biggest importer of vegetable oils, is considering raising its import duty on palm oil to help support local farmers reeling from a crash in domestic rapeseed prices, government and industry officials said on Monday.</p>.<p>The increase in the tax on palm oil could lift local prices, making the tropical oil a little less competitive than rival soyoil and sunflower oil.</p>.<p>"We have proposed an increase in import duty on palm oil to support rapeseed prices," said a government official, who declined to be named in line with official rules.</p>.<p>"Rapeseed supplies from the new season are putting pressure on prices, which have fallen below MSP (minimum support price)," said the source referring to the government-set rate which acts like a benchmark for the domestic market.</p>.<p>If commodity prices fall below MSPs, the government usually tries to help prop up rates to protect farmers.</p>.<p>In spot markets, rapeseed prices were around 5,000 Indian rupees ($61.21) per 100 kg, below the government-fixed price of 5,450 rupees per 100 kg.</p>.<p>Indian farmers plant rapeseed, the main winter-sown oilseed, in October and November, with harvests from March. Higher prices encouraged farmers to expand the area under rapeseed.</p>.<p>After abolishing the basic import tax on crude palm oil (CPO) last year, India continues with a 5.5% tax on CPO shipments. The country also levies a 12.5% import tax on refined, bleached and deodorized palm oil.</p>.<p>"Since world prices have dropped, India is looking at raising the duty," the source said. "Overall food inflation might be a concern for the government, but vegetable oil prices have dropped."</p>.<p>Lower rapeseed prices have hurt farmers from India's western state of Rajasthan, and the government would like to protect growers ahead of the state election, trade and industry officials said.</p>.<p>Rajasthan accounts for more than half of the rapeseed production.</p>.<p>"There is a proposal to raise the duty, and an inter-ministerial panel is looking into it," said the second source, who also didn't want to be named citing official rules.</p>
<p>India, the world's biggest importer of vegetable oils, is considering raising its import duty on palm oil to help support local farmers reeling from a crash in domestic rapeseed prices, government and industry officials said on Monday.</p>.<p>The increase in the tax on palm oil could lift local prices, making the tropical oil a little less competitive than rival soyoil and sunflower oil.</p>.<p>"We have proposed an increase in import duty on palm oil to support rapeseed prices," said a government official, who declined to be named in line with official rules.</p>.<p>"Rapeseed supplies from the new season are putting pressure on prices, which have fallen below MSP (minimum support price)," said the source referring to the government-set rate which acts like a benchmark for the domestic market.</p>.<p>If commodity prices fall below MSPs, the government usually tries to help prop up rates to protect farmers.</p>.<p>In spot markets, rapeseed prices were around 5,000 Indian rupees ($61.21) per 100 kg, below the government-fixed price of 5,450 rupees per 100 kg.</p>.<p>Indian farmers plant rapeseed, the main winter-sown oilseed, in October and November, with harvests from March. Higher prices encouraged farmers to expand the area under rapeseed.</p>.<p>After abolishing the basic import tax on crude palm oil (CPO) last year, India continues with a 5.5% tax on CPO shipments. The country also levies a 12.5% import tax on refined, bleached and deodorized palm oil.</p>.<p>"Since world prices have dropped, India is looking at raising the duty," the source said. "Overall food inflation might be a concern for the government, but vegetable oil prices have dropped."</p>.<p>Lower rapeseed prices have hurt farmers from India's western state of Rajasthan, and the government would like to protect growers ahead of the state election, trade and industry officials said.</p>.<p>Rajasthan accounts for more than half of the rapeseed production.</p>.<p>"There is a proposal to raise the duty, and an inter-ministerial panel is looking into it," said the second source, who also didn't want to be named citing official rules.</p>