(Recasts lead, adds quotes from industry officials on the price effects and a
likely shift to consumption and imports of soyoil instead of palm oil)


  NEW DELHI (Dow Jones)--Indian Trade Secretary G. K. Pillai said Thursday that
the import tax on soyoil has been cut to zero from 20%.

  The cut will even the playing field between imported palm oil and soyoil,
sparking a shift toward more consumption of the latter by reducing local prices
of soyoil, brokers said.

  Indian rapeseed oil prices are also likely to fall following the government's
decision, local trade officials said.

  "The elimination of the duty on soybean oil will have a direct impact on the
price of (local) rapeseed and rapeseed oil, and (prices of) the two may go down
further," said B.V. Mehta, executive director of the Solvent Extractors'
Association of India.

  "It will affect the interests of the farmer," he added.

  Mehta said prices of some of the locally produced oilseed crop were already
down by 30% to 40% over the same period last year.

  "Currently, rapeseed is under harvest and is being sold just above the
minimum support price," he said. "The current prices are already at bottom."

  Official notification of the tax cut will be forthcoming, Pillai told
reporters.

  The benchmark June contract of crude palm oil futures on Malaysia's
derivatives exchange gave up all its intraday gains and fell into negative
territory on the news, while prices of soyoil in electronic trading of Chicago
Board of Trade futures rose as much 2.9%.

  Trade officials said the cut in the import tax will boost consumption of
soyoil across the country, instead of restricting its consumption to coastal
areas close to ports.

  "This (cut) will boost the consumption of soyoil as palm oil is not good for
health," Ashok Dodeja, a Raipur-based broker said. Palm oil contains higher
levels of saturated fats.

  Local soybean prices are about INR23,100 ($457) a metric ton, much higher
than the state-set purchase price of INR13,900/ton. The government buys
commodities at state-set prices when local market prices fall below those
levels.

  Local soyoil prices are expected to come down by INR3 a kilogram from about
INR45.50/kg, Suresh Maheshwari, an Indore-based broker said.

  "Imports of soyoil from Argentina will rise sharply," Maheshwari said.