Edible oil duty cut may put 8% retail price hikes on hold
India reduced import duties on edible oils to 11% for crude palm and soybean and 5.5% for sunflower. This helps companies absorb global cost spikes and defer planned retail price hikes ahead of the festive season, benefiting consumers.
The government’s decision to cut import duties on edible oils on Wednesday is likely to prompt companies to put their proposed 7–8% retail price increases on hold, giving them some room to absorb higher global costs ahead of the festive season.
The move comes as the landed cost of imported edible oils has risen 8–11%, driven by geopolitical uncertainty, higher freight and insurance costs, rupee depreciation and increased diversion of edible oils towards biofuel production by major exporters such as Indonesia.
Festive price hikes may be deferred
Industry sources said the government had indicated to edible oil companies that retail prices should be held during the October-November festive period, when demand typically rises for sweets, snacks and fried foods. The reduction in import duties could enable companies to defer the planned price increases and absorb part of the rise in global costs, rather than passing the entire burden on to consumers.
“This will bring respite to the consumers from high prices particularly in view of the upcoming festivals. This will also stimulate the demand for edible oils and overall benefit the industry,” said Akshay Chowdhry, group vice-president, Gemini Edible & Fats India.
“The landed cost of edible oil, which had increased by 8–11%, will now reduce,” said Aditya Agarwal, director, Emami Group, which sells cooking oils under the Healthy & Tasty and Best Choice brands through group company Emami Agrotech.
The effective import duty on crude palm and soybean oils, including the agriculture infrastructure and development cess and special additional duty, has been cut to 11% from 16.5%. For crude sunflower oil, the effective duty has fallen to 5.5% from 16.5%, following the abolition of the basic customs duty.
For refined oils, the effective duty on soybean and palm oil has been reduced to 30.25% from 35.75%, while refined sunflower oil will attract 24.75%.
The duty cuts come as domestic edible oil prices remain well above year-ago levels. Average retail prices of mustard, soybean and palm oils stood at Rs 202.67, Rs 167.11 and Rs 153.61 per kg, respectively, on Thursday, according to the Department of Consumer Affairs’ price monitoring cell. The three oils were 8%, 14% and 16% more expensive than a year earlier.
India imports over 58% of edible oil needs
The duty cut matters because India imports more than 58% of its annual edible oil requirement. Palm, soybean and sunflower oils account for most of the roughly 16 million tonnes of edible oils imported annually.
The lower duties could also alter import economics. The Solvent Extractors’ Association of India (SEA) said the reduction could narrow the arbitrage advantage for refined edible oil entering India from Nepal under the existing bilateral trade framework.
“A lower domestic import duty could reduce the arbitrage advantage associated with such imports from Nepal and thereby moderate the incentive for large-scale inflows,” said B V Mehta, executive director, SEA.
Sudhakar Desai, president, Indian Vegetable Oil Producers’ Association, said lower duties should improve the landed cost of imported oils and provide some reduction in consumer prices. He added that the sharper reduction in sunflower oil duty could make the oil more affordable, particularly in southern India.
The government had reduced import duty on major crude edible oils—sunflower, soybean and palm—from 20% to 10% in June 2025. The latest cuts further lower the tariff burden as the government seeks to contain domestic prices and support edible oil consumption during the festive season.
To Read more about Edible Oil News continue reading Agriinsite.com
Source : Financial Express
