By Pratik Parija Oct. 22 (Bloomberg) -- India, the world's largest buyer of vegetable oils after China, may impose tax on imports to protect oilseed growers as cheap palm oil floods the domestic market. The government may levy the tax after the Diwali festival on Oct. 28, Farm Minister Sharad Pawar said in New Delhi today. Duty on crude soybean and palm oils was scrapped in April and the levy on refined edible oils was cut to 7.5 percent to bolster supplies. Lower vegetable oil purchases may pressure palm oil prices, which have fallen to a two-year low in Malaysia, which trades the global benchmark. The tropical oil makes up 90 percent of India's total purchases of edible oils. Edible oil imports in September gained 9 percent to 623,208 metric tons from 569,538 tons a year ago, the Solvent Extractors' Association said last week. Imports climbed 14.5 percent to 4.82 million tons in the 11 months ended Sept. 30, the trade body said. January-delivery palm oil dropped as much as 6.7 percent to 1,542 ringgit ($434) a metric ton, the lowest since Oct. 2006, on the Malaysia Derivatives Exchange. Prices have halved this year as demand lags behind supply. The government may also lift a ban on exports of cooking oils after Diwali, Pawar said. Sales abroad were halted for a year in March to bolster domestic supplies. A levy on exports of the aromatic basmati rice may be lifted, Pawar said, adding the government won't scrap curbs on exports of other varieties of the grain. India, the world's second-biggest rice producer, is forecast to harvest a record crop this year after rains spurred farmers to boost sowing. The monsoon crop, planted in June, may total 83.25 million metric tons, the government said last month. That's 0.5 million tons more than a year earlier. To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net.

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