India cuts import tax on crude edible oils to control prices
03/06/2025 (The Star Online), New Delahi - India halves its basic import duty on crude edible oils, while keeping the tax on refined forms unchanged, in a move to control local prices and support the processing industry.
The government cut the levy on crude palm, soybean and sunflower oils to 10%, according to an official notification.
The change, effective since May 31, will reduce the effective tax – after including other charges – to 16.5% from 27.5%.
The action by the world’s largest importer of cooking oil is expected to help lower retail prices of packed edible oils, which have jumped as much as 30% in 12 months.
It will also support refiners, who have been complaining that a narrow tax differential was hurting their operations.
India’s initiative may underpin global prices of cooking oils by bolstering demand.
Crude palm oil prices in Kuala Lumpur have fallen almost 13% so far this year on higher supplies and unstable demand.
However, soybean oil prices in Chicago have surged 16% during the period.
The world’s most populous nation, with about 1.4 billion people, India relies on imports for about 60% of its edible oil needs.
It mainly buys palm oil from Indonesia and Malaysia, soybean oil from Argentina and Brazil, and sunflower oil from the Black Sea region.
“This is a win-win situation for vegetable oil refiners as well as for consumers, as local prices will go down due to the lower duty on crude oils,” said B.V. Mehta, executive director of the Solvent Extractors’ Association of India.
The decision to widen the duty gap between crude and refined oils to 19.25% from 8.25% will discourage imports of refined palm olein and shift demand back to crude palm oil, “revitalising the domestic refining sector,” Mehta said.
Food inflation in India could drop further on expectation of higher oilseed production following an early start of the monsoon this year.
The India Meteorological Department has predicted above-average precipitation during the June to September rainy season, a favourable condition for monsoon-sown crops such as rice, soybeans and cotton.
The government’s action will help protect the sector from an influx of refined oils, which has had a negative impact, said Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association. — Bloomberg