KUALA LUMPUR - India's edible oil imports for the year to October 2018 may be nearly flat on 2017 as a weaker rupee adds to the impact of a tax hike on the country's most imported edible oil, a Mumbai-based trade body said, revising down earlier forecasts.

Refiners are still able to import soft oils such as soyoil and sunflower oil at a profit, but imports ofpalm, which attracts the country's biggest import duty, have been hard hit, said B.V. Mehta, executive director of the Solvent Extractors' Association (SEA).

"Traders are facing great difficulties and the pipelines are getting dry. Excess imports have reduced," said Mehta.

SEA had reduced its forecast for edible oil imports for the current marketing year to end-October, originally at 15.8 million to 16 million tonnes, by about half a million tonnes, he said.

This would put imports at just over 2017's 15.1 million tonnes. Palm oil accounts for more than half of India's total edible oil imports.

India raised import taxes on crude and refined palm oil in March to the highest level in over a decade to support local farmers.

Malaysian palm exports to India slumped nearly 40 percent in April on-month, while shipments in the first half of May fell to 15,000 tonnes from 89,000 tonnes, cargo surveyor data showed. [PALM/SGS]

India's rupee has fallen about 4 percent since the start of April due to a broadly firmer U.S. dollar and rising oil prices.

A Kuala Lumpur-based trader estimated that India's takeup of palm oil could fall by 100,000 tonnes in May, hurt also by tighter credit conditions after a local bank fraud case curbed importers' ability to purchase.

"Some big importers are reducing palm oil imports by a third, the smaller players are no longer buying crude palm oil or olein," he said, referring to a refined, liquid form of the tropical oil.

"The banking system is very tight and cash flow is a problem. Unless India changes its duty for soft oils like soyoil and sunflower oil, there will be no activity on the palm side as Malaysia also resumed export duties in May."

Malaysia reimposed a crude palm oil export tax in May after an earlier suspension to increase demand.

The benchmark August contract on the Bursa Malaysia Derivatives Exchange has eased about 3 percent so far this year. Palm was last down 0.6 percent at 2,422 ringgit ($611.15) a tonne at Wednesday's midday break.

($1 = 3.9630 ringgit)

(Reporting by Emily Chow; editing by Richard Pullin)

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