Reduction in Crude Cooking Oil Import Duty to Enhance Local Processing: Industry
India Reduces Import Duties on Crude Palm, Soybean, and Sunflower Oils
India has decided to cut the import duty on crude palm, soybean, and sunflower oils to 10% in an effort to reduce the import of refined oils and boost domestic processing. The move has been welcomed by industry players for its support to refiners and consumers, although critics have expressed concerns about its potential negative impact on local crushers and farmers. Last September, the government had raised import duties on crude oils to 27.5% from 5.5% and on refined edible oil to 35.75% from 13.75% in a bid to promote domestic production.
The reduction in basic custom duty from 20% to 10% on crude palm, soybean, and sunflower oils is expected to limit the import of refined oils and enhance domestic processing, as highlighted by industry associations such as the Solvent Extractors Association of India (SEA) and the Indian Vegetable Oil Producers’ Association (IVPA). BV Mehta, the executive director of SEA, emphasized that this decision would benefit both veg oil refiners and consumers, leading to a decrease in local prices due to the lower duty on crude oils.
Following the announcement of the import duties on Friday, the effective import duty on these three oils has been reduced to 16.5% from the earlier 27.5%. This adjustment was made in response to the significant price increase of edible oils in recent months, with retail inflation in the ‘oils and fats’ category reaching 17.42% in May. However, the basic custom duty on refined oils remains unchanged at 32.5%.
India, which imports approximately 57% of its edible oils, with a consumption of around 25 million tonnes, aims to strengthen the domestic refining capacities of Indian refiners and ensure fair prices for oilseed farmers and consumers with this move. Sudhakar Desai, the president of IVPA, expressed confidence that the decision would support both the refining industry and the agricultural sector.
On the other hand, the Soybean Processor Association of India (SOPA) has raised concerns about the reduction in import duties, especially after the government had increased the minimum support price of kharif oilseeds. SOPA’s executive director, DN Pathak, believes that this decision could harm local crushing and farmers, favoring the import lobby over domestic industry and hindering the goal of achieving self-sufficiency in edible oils.
India imported 15.96 million tonnes of edible oils during the 2023-24 oil year, valued at Rs 1.32 lakh crore. In the first six months of the oil year, cooking oil imports declined by 8% to 6.5 million tonnes compared to the previous year, as reported by the SEA. The country imports crude palm oils from Malaysia and Indonesia, while soybean and sunflower oils are sourced from Argentina, Brazil, Russia, and Ukraine.
