In a bid to ease domestic prices and provide relief to consumers, the Indian government has slashed the basic import tax on crude edible oils by 10 percentage points. Effective May 31, 2025, this decision comes as India heavily relies on imports to meet its vegetable oil demand, sourcing primarily from Southeast Asia and South America, Russia, and Ukraine.
The government's notification specified that the duty change would apply to crude palm oil, crude soyoil, and crude sunflower oil. This move effectively reduces the total import duty on these oils to 16.5% from the previous 27.5%, accounting for the Agriculture Infrastructure and Development Cess and Social Welfare Surcharge. However, the import duty on refined edible oils remains unchanged at 35.75%.
India is the world's largest importer of edible oils, with imports fulfilling over 70% of its domestic demand. The country imports palm oil mainly from Indonesia, Malaysia, and Thailand, while soyoil and sunflower oil are sourced from Argentina, Brazil, Russia, and Ukraine. In the 2023-24 oil marketing year (November to October), India imported 159.6 lakh tonnes of edible oils, valued at Rs 1.32 lakh crore.
Industry stakeholders have welcomed the government's decision. According to B.V. Mehta, executive director of the Solvent Extractors' Association of India (SEA), this move is a "win-win situation" for both vegetable oil refiners and consumers, as lower duties on crude oils will lead to a reduction in local prices. Sudhakar Desai, president of the Indian Vegetable Oil Producers' Association (IVPA), also lauded the government's decision, emphasizing that it would increase the duty differential between crude and refined edible oils to 19.25%, thus protecting the domestic sector from refined oil influx.
The differential in import duties between crude and refined oils is expected to encourage importers to purchase crude edible oils rather than refined ones, thereby boosting the domestic refining industry. According to Sanjeev Asthana, president of SEA, the increased duty differential will discourage imports of refined palmolein and shift demand back to crude palm oil, revitalizing the domestic refining sector.
The duty cut is also expected to boost demand and increase overseas purchases of palm oil, soyoil, and sunflower oil. Sandeep Bajoria, CEO of Sunvin Group, anticipates that the reduction in basic duty will lower edible oil prices and revive retail demand, which has been subdued in recent months.
This decision follows a previous increase in import duties in September 2024, when the government raised the basic customs duty on crude soybean, palm, and sunflower oils from 0% to 20%, resulting in an effective duty rate of 27.5% on crude oils. The duty on refined oils was increased from 12.5% to 32.5%, leading to an effective rate of 35.75%. The previous increase aimed to stabilize domestic oilseed prices and protect farmers' incomes.
Despite the fluctuations in import duties, India's demand for edible oils is projected to continue rising. The India edible oil market is expected to reach 28.2 Million Tons by 2033, exhibiting a growth rate (CAGR) of 1.31% during 2025-2033. Factors such as increasing disposable incomes, rising urbanization rates, and changing dietary habits are driving the demand for edible oil in India.
