Edible oil expected to become cheaper after reduction in customs duty

03-Jun-2025 04:24 PM

Mumbai. The Central Government has reduced the basic import duty on crude palm oil, soybean oil, and sunflower oil by half—from 20 percent to 10 percent—making their import cheaper and raising expectations of a fall in domestic edible oil prices. The decision to reduce duty has already come into effect.

The reduction in customs duty aims to control rising prices in the domestic market while also supporting the indigenous refining industry.

The domestic edible oil sector had been urging the government to maintain at least a 20 percent difference between the import duty on crude and refined edible oils.

With the latest policy change, the import of refined edible oils is expected to decline as they will become comparatively more expensive.

Following the government's decision on May 30, the total effective import duty on crude edible oils has been reduced from 27.5 percent to 16.5 percent.

However, the duty on refined edible oils remains unchanged at 35.75 percent. Prominent industry bodies such as the Solvent Extractors Association of India (SEA) and the Indian Vegetable Oil Producers Association (IVPA) have welcomed the move, stating it will help the domestic processing industry better utilize its installed refining capacity and lead to a decrease in retail prices.

In India, the refined edible oil segment primarily includes imports of RBD palmolein from Indonesia and Malaysia. In recent years, the country has witnessed a surge in palmolein imports, which had become a growing challenge for the domestic refining industry.

Now, with the new duty structure, these imports are expected to decline, while the import of crude edible oils may rise, boosting domestic refining and benefiting consumers.