Indian refiners of edible oils urged the government on Tuesday to stop issuing import licenses for palmolein to help avoid a crash in domestic prices of rapeseed.
India is the world's biggest importer of palm oil, an alternative ingredient to rapeseed oil in food. In a surprise move last week the government issued import licences for 1.1 million tonnes of refined palmolein from Indonesia, weeks after curbing overseas purchases of the commodity.
On January 8, India had put refined palm oil and palmolein on a list of restricted items, a move seen by trade experts as a retaliatory step against top supplier Malaysia after Kuala Lumpur criticised India's policy on Kashmir, a disputed Muslim-majority region also claimed by Pakistan.
Malaysia has also denounced India for a new citizenship law, which critics say undermines New Delhi's secular foundations.
With India's rapeseed harvest about to begin next month, the Solvent Extractors Association of India said its president, Atul Chaturvedi, had written to India's commerce minister on Tuesday, saying the government should not issue refined palmolein import licenses as any further purchases would result in a sharp drop in rapeseed prices and cut farmers' incomes.
Lower rapeseed prices could dissuade growers who could switch to other crops, jeopardising India's efforts to boost its local oilseed output to cut the country's reliance on imports, India's edible oil refiners say.
Indian farmers plant rapeseed, the main winter oilseed with the highest oil content, from October, and harvests start in March.
Indian palm oil imports fell 27% in January from a year earlier to 594,804 tonnes, partly due to the restriction on imports of refined palm oil.
The country imported 9.4 million tonnes of palm oil in the marketing year that ended in October, including 2.72 million tonnes of refined palm oil.
Palm oil makes up nearly two-thirds of India's total imports of edible oils. It buys palm oil mainly from Indonesia and Malaysia, the world's top two producers of the commodity.
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