KUALA LUMPUR, March 5 (Xinhua) -- India's move to raise its palm oil import tax to the highest in more than a decade will again hit palm oil demand and prices as it makes the oil substantially costlier in the country, said analysts Monday.

CIMB Research's analyst Ng Lee Fang estimated in a report that India's move will make palm oil costlier in India by around 15 percent.

"On top of this, crude palm oil will be pricier compared to other imported crude edible oils due to the widening import duty differential between palm oil and other edible oils under the new import duties structure," she said, adding that this could lead to weaker demand for palm oil from India, resulting in softer CPO prices.

India last week raised its import duties on crude palm oil (CPO) and refined palm oil by 14 percentage points to 44 percent and 54 percent.

Maybank Kim Eng's analyst Ong Chee Ting also said in a report that India's latest new import duty is more punitive than the previous round as palm oil will lose its price competitiveness significantly compared to other edible oils.

"It will effectively cancel out Malaysian government recent positive move, damaging the country's palm oil demand and prices," he said.

Earlier on Jan. 8, the Malaysian government temporarily suspended the CPO export taxes for a period of three months to ease the country's palm stockpile price.

MIDF Research's analyst Alan Lim who foresees immediate negative impact from India's new move on palm industry, however, believed things should normalize after two months as India consumption is only 11 percent of oils and fats globally.

"As the increase is targeted only to palm oil, we do expect India to boost their purchase of soybean oil and rapeseed oil as the import duty on these oils is lower as compared to palm oil. This should also result in higher price for soybean oil and rapeseed oil globally," he said.

Thus, in the long run, he believed the move will improve the competitiveness of palm oil against soybean oil and rapeseed oil and hence increase the demand for palm oil in other major consumer countries.