Edible oil prices set to rise as India increases import tariffs ahead of festive season
India’s recent increase in import tariffs on edible oils is set to raise prices by 10-15% ahead of the festive season. The tariffs on crude palm, soybean, and sunflower oils have surged to 27.5%, while those on refined oils have risen to 35.75%. This hike aims to support domestic oilseed farmers but may affect consumer prices and consumption.
Premium Edible oil prices set to rise as India increases import tariffs ahead of festive season Companies such as Emami Agrotech, which makes the Healthy & Tasty edible oil brand, say that players may have to take at least a 10-15% price hike to cover for the sharp increase in import duties announced on Friday. Written by Sandip DasViveat Susan Pinto September 17, 2024 09:00 IST Follow Us
When contacted, Angshu Mallick, MD & CEO, Adani Wilmar, which makes the Fortune brand of edible oils, said that the company was yet to take a call on price hikes. (Image Credits: Freepik) Consumers may have to cough up more for their favourite brand of edible oil after the government increased import tariffs by as much as 22% on Friday. The import duty hike comes just as the festive season begins in India, when consumption of edible oils tends to be high. India imports about 58% of its edible oil consumption of 24-25 million tonnes (MT), according to experts. The retail inflation in oil and fat category had been in the negative zone since February, 2023.
Companies such as Emami Agrotech, which makes the Healthy & Tasty edible oil brand, say that players may have to take at least a 10-15% price hike to cover for the sharp increase in import duties announced on Friday. Duties on crude palm, soybean and sunflower oils have been increased to 27.5% from the current level of 5.5%. The levy on refined edible oil, meanwhile, has been raised to 35.75% from 13.75%.
“While the move to increase import duty on edible oil is intended to support farmers, there will be an impact on consumers as prices will increase. Prices could go up by at least 10-15% in the coming weeks. This could hurt consumption as we get into the festive season,” Aditya Agarwal, director, Emami group, told FE.
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“There has been pressure on prices of edible oils since the announcement of increase in import duty and the impact of increase in price of mustard oil would be clear in days to come,” Umesh Verma, spokesperson of P-mark, a leading brand of mustard oil, said.
When contacted, Angshu Mallick, MD & CEO, Adani Wilmar, which makes the Fortune brand of edible oils, said that the company was yet to take a call on price hikes. “We haven’t decided on the way forward yet. The decision to increase import duty by the government happened on Friday. Pricing action, if any, will be carefully thought through,” he said.
Edible oil companies had seen double-digit volume growth (of around 12-15%) over the last few quarters on the back of lower prices as consumption improved. That trend could get reversed now, though value growth could improve as prices increase, said sector experts.
Trade sources, meanwhile, have told FE that the move to hike import duties would help industry pay better prices to domestic oilseeds farmers who had been hit by cheaper oil imports.
“Higher duty will allow industry to pay remunerative prices to oil-seed farmers while impact on the retail prices of cooking oil will be limited,” BV Mehta, executive director, Solvent Extractors’ Association of India (SEA), said.
The SEA has projected the total import of edible oil during the current oil year (November 2023-October 2024) in the range of 16 -16.5 MT. In the 2022-23 oil year, India’s import of edible oils rose 17% on year to a record 16.47 MT helped by lower import tariffs of only 5.5% on crude oil imports.
Earlier the agriculture ministry had suggested that import duty on edible oil should not be less than the cost of cooking oils processed from any domestic variety of edible oil.
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