"Short term demand will see a major impact because it was such a steep price hike, but (India's) local oilseed production is not enough to cover all its demand," said David Ng, derivatives specialist at Phillip Futures in Kuala Lumpur.
The duty hike should lift India's local oilseed prices, which may encourage farmers to sell oilseeds and increase supply for crushing, said Dinesh Shahra, managing director of Ruchi Soya.
Indian oilseed crushers had been struggling to compete with cheaper imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soybeans which have been trading below government-set prices in the physical market and angering farmers.
"Importers will first clear earlier inventories. Then they will see at what level prices stabilise in the local market before deciding about December imports. December imports could be around 600,000 tonnes," said a Mumbai-based dealer with a global trading firm.
While market participants were anticipating a duty hike, the extent of the increase surprised them.
"The overall import volumes are unlikely to change significantly for the entire marketing year as local oilseeds supplies are limited and there is huge demand," said B.V. Mehta, executive director of the Solvent Extractors' Association, a Mumbai-based trade body.
The South Asian country could import 15.5 million tonnes edible oils in the current year, down from an earlier estimate of 15.9 million tonnes, said Sandeep Bajoria, chief executive of the Sunvin group, a vegetable oil importer.
($1 = 4.1500 ringgit)