Reducing duty on unrefined oils in India will help lower prices and support local refineries

The Indian government on Friday reduced the basic duty on crude palm, soybean and sunflower oils to 10% from 20%. The move is aimed at reducing retail prices of cooking oils and supporting local processors, the Indian finance ministry said, adding that the changes are effective immediately.

India imports more than 50% of its edible oil requirements. In the 2023/24 MY, the country imported 159.6 million tonnes of edible oils worth Rs 1.32 trillion. The reduction in duty on crude oils, according to B.V. Mehta, executive director of the Society of Indian Oil Processors (SEA), will reduce the effective import duty from 27.5% to 16.5%, while the duty on refined oils remained unchanged at 35.75%.

SEA associations and the Indian Vegetable Oil Producers Association (IVPA) welcomed the government’s decision. SEA President Sanjiv Asthana said that increasing the duty differential between crude and refined oils from 8.25% to 19.25% will help revive the domestic refining sector by reducing imports of refined palm oil and stimulating demand for crude palm oil.

According to IVPA President Sudhakar Desai, the decision supports the “Make in India” initiative and protects the sector from the influx of cheaper refined oils that are creating problems for local refiners. Mehta added that imports of refined palm oil have been increasing recently due to its lower price compared to crude.

The reduction in duty on crude oil will help reduce domestic prices, which will benefit consumers. India imports palm oil from Malaysia and Indonesia, while soybean oil from Brazil and Argentina. Recall that on September 14, 2024, the basic duty on crude soybean, palm, and sunflower oils was increased from 0% to 20%.

Tags: India, imports, edible oils