Government Slashes Edible Oil Import Duty by 10% to Curb Prices & Inflation

In a major move to curb rising inflation and support the domestic edible oil industry, the Government of India has reduced the basic customs duty on crude edible oils from 20% to 10% on May 30 to be applied with immediate effect.

The move is expected to bring down edible oil prices, boost demand, and increase overseas purchases of palm oil, soyoil and sunflower oil.

India currently imports over 70% of its edible oil needs. India primarily imports palm oil from Malaysia, Thailand and Indonesia, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine. the reduced duty makes crude oil imports more attractive than refined ones. This could help reverse the recent surge in refined oil imports driven by their lower cost.

The revised duty structure applies to crude palm oil, crude soybean oil, and crude sunflower oil. With this change, the total import duty on crude edible oils including all taxes has been reduced to 16.5%, down from 27.5%. However, there is no change in the duty on refined oils, which remains at 35.75%.

Industry Welcomes the Move

Industry bodies SEA and the Indian Vegetable Oil Producers' Association (IVPA) have welcomed the government's latest move, calling it a step in the right direction.

In a late-night statement, SEA president Sanjeev Asthana said, "The government's decision to increase the duty differential between crude and refined oils from 8.25 per cent to 19.25 per cent is a bold and timely move. It will discourage imports of refined palmolein and shift demand back to crude palm oil, thereby revitalising the domestic refining sector."

The reduction in duty on crude oil will help reduce domestic prices, benefiting consumers, he added.

IVPA president Sudhakar Desai said, "We thank the government for accepting the IVPA recommendation to increase the duty differential between crude and refined edible oils to 19.25 per cent."

It is a significantly bold move towards ensuring Make in India and also protecting the sector from the influx of refined oils, causing capacity injury to the vegetable oil sector, Desai said.

No Change in Refined Oil Duties

While the reduction offers relief on crude oils, there is no change in the duty on refined edible oils. The basic customs duty on refined oil remains at 32.5%, with an effective duty of 35.75%. As a result, consumers using refined oils will not see immediate price reductions.

Union Food Secretary Sanjeev Chopra confirmed the development, reiterating that the decision is aimed at balancing consumer interests with those of local businesses.

The current cut follows last year's increase in customs duties. In September 2024, the government had raised the basic customs duty on crude soyabean oil, crude palm oil, and crude sunflower oil from zero to 20 percent, and on refined oils from 12.5 percent to 32.5 percent, as part of a broader effort to support domestic producers.

With this new reduction, the government aims to strike a balance between consumer relief and industry growth easing inflation while reinforcing domestic processing capabilities.