Indian vegetable oil buyers await clarity on US trade deal

Indian vegetable oil importers are waiting for more details on a recently announced trade agreement between India and the United States that could lead to lower tariffs on several American goods, including soybean oil. So far, only a broad framework of the deal has been released, while key specifics remain unclear.

According to preliminary information, India may reduce import duties on US soybean oil and other agricultural products, while the United States is expected to cut some reciprocal tariffs introduced in 2025 from 50% to 18%. Currently, imports of crude vegetable oils into India face a combined duty of about 16.5%.

Market participants speculate that tariff reductions could range between 0% and 15%, alongside the possible introduction of a tariff-rate quota of around 200,000–250,000 tonnes. Such a mechanism would allow a limited volume of US soybean oil to enter at reduced duties, with shipments beyond the quota subject to standard tariffs.

Despite the potential duty cuts, experts doubt that US soybean oil will be able to compete on price with South American supplies due to higher freight costs and strong domestic demand from the US biofuel sector. At present, palm oil remains the cheapest option for Indian buyers, while US soybean oil is significantly more expensive on a landed basis.

India is the world’s largest edible oil importer, with most of its soybean oil sourced from Argentina and Brazil. Even if a quota of about 250,000 tonnes is implemented, it would represent only around 1% of India’s annual edible oil consumption.

Competition is expected to intensify further during April–July, when South America’s harvest boosts soybean oil availability. As a result, analysts believe the trade deal’s impact on global trade flows will likely remain limited and will depend on the final quota volumes, tariff levels, and the United States’ export capacity.

Tags: soybean oil, India, USA, duties