Govindlal Patel, president of the Central Organisation for Oil Industry and Trade (COOIT) said that edible oil imports had surged in the first seven months of the current oil year 1998/99 (November-October).

"The market is bad due to excessive imports. During the seven months between November and May we have imported 1.84 million tonnes of oil against 5,70,000 tonnes in the corresponding period last year," Patel said.

Trade officials said world edible oil prices, at their lowest level in 12 years, had slipped by nearly 40 per cent to 45 per cent in the past nine months. The price of RBD palmolein in the world market has crashed to $420 a tonne CIF from its September 1998 level of $765 per tonne, a drop of $345 per tonne, he said.

Also in CIF terms, sunflower oil had dropped to $475 per tonne from $700 a tonne inSeptember 1998 and soybean oil to $430 per tonne from $675 a tonne. "The government should regulate imports and the only way to do that is to increase the import duty on edible oils. It should be raised by at least 10 per cent," Patel said.

India levies a 16.5 per cent import duty on edible oils but has imposed a 40 per cent duty on imports of soybeans (split or crack form), sunflower seed and rapeseed.

Trade officials said the Indian government should take a cue from neighbouring Pakistan which imposed heavy import duties to ease its edible oil imports. "Pakistan during last one month has increased duty twice, once by Rs 2,000 a tonne and then again by Rs 1,000 per tonne. In Pakistan, the import duty is 50 per cent while in India it is only 16.5 per cent," Patel said. However, Navinbhai Shah, president of the Bombay Oils and Oilseeds Exchange, said prices in the domestic market were steady and were in line with Malaysian palmolein prices. "The domestic prices for palmolein are Rs 23,500 a tonne and theyare unlikely to move out of the narrow range of Rs 23,000 to Rs 24,000 per tonne," Shah said.

He added that inquiries from China ensured that the Malaysian palmolein prices did not show any abrupt downward movements.

Traders said reports of a good monsoon had brightened the prospects of a good domestic crop.

"Monsoon is good, initial rains are widespread, and sowing of groundnut and other oilseeds in Saurashtra region has started. Cotton sowing has also started," Shah said. He said a second spell of rains was needed after a fortnight for further soil moisture and to increase the domestic supplies. ``Domestic supplies are low because people are stocking in anticipation of a rise in prices. The lots of rapeseed stock, lying with the farmers, will be released after they see the second round of rainfall which is expected later in July," Shah said.

Industry officials said due to excessive import of edible oils the processing industry had almost come to a halt with nearly 60 per cent of the mills forced toclose down and the remaining working intermittently.