July 25 (Bloomberg) -- India, the world's second-biggest vegetable oil buyer, may increase monthly palm oil imports by about 80 percent after the government cut tariffs, according to Dorab Mistry, director of Godrej International Ltd.

India will import as much as 450,000 metric tons of palm oil products a month between July and October, said Mistry in a phone interview from London. Average monthly imports in the eight months to June have been about 245,000 tons, according to the Web site of the Solvent Extractors' Association of India.

``The cut in import duties favors crude palm oil and this will lead to a bigger volume of imports,'' said Mistry, who has traded vegetable oils since 1976. Godrej International, a unit of Mumbai-based Godrej Industries Ltd., is one of India's biggest buyers of vegetable oils.

Higher shipments to India may boost palm oil prices in Malaysia and soybean oil in Chicago. The price of palm oil reached a record on June 6 driven by increased use of vegetable oils as fuel additives, after crude oil prices tripled in the five years ended 2006.

Palm oil for October delivery on the Malaysia Derivatives Exchange, the benchmark for the commodity, closed 4 ringgit, or 0.2 percent, lower at 2,521 ringgit ($736) a ton. The price has risen more than 60 percent in the past year as soybean oil advanced 40 percent in Chicago.

Biggest Producers

The nation imports palm oil, typically used as cooking oil or in soaps, from Indonesia and Malaysia, the world's biggest producers. The tropical oil is the world's most-consumed vegetable oil and can be mixed with diesel to stretch fossil fuel supplies.

India, which buys almost half the vegetable oil it needs from overseas, revised the import tariffs on crude palm oil to 45 percent, reversing a notification yesterday. The finance ministry in a notification on its Web site said the duty on crude palm oil would be 45 percent and not 40 percent as notified on July 23.

The nation's vegetable oil imports, including palm kernel fatty acids and kernel oils, will average as much as 650,000 tons a month until October, Mistry said. Imports of vegetable oil in the year to October would be 6 million tons, down 6.3 percent from the 6.4 million Godrej forecast in May.

``Higher prices seem to have slowed consumption in India and that may pull down overall imports,'' Mistry said.

Vegetable Oil

India bought 590,000 tons of edible and inedible vegetable oil in June, according to the Solvent Extractors' Association. Imports rose 6.3 percent to 3.2 million tons in the eight months ended June 30 from a year earlier, said the trade body, which represents about 800 oilseed processors.

Output of palm oil in Malaysia and Indonesia, which account for 90 percent of the world production and exports of the commodity, typically peaks between July and September. Malaysian companies produced 54 percent of last year's volume in the second half, data from the Malaysian Palm Oil Board shows.

``Production is the main price driver and at present we are still in the low cycle,'' Mistry said.

Mistry expects palm oil to trade between 2,300 ringgit and 2,500 ringgit a ton until the middle of August.

China is the largest importer of palm oil.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net.

Last Updated: July 25, 2007 08:44 EDT