India's cut in edible oil import duties may keep the retail price increases the industry had been preparing from reaching kitchens this festive season. The landed cost of imported edible oils has risen 8-11%, pushed up by geopolitical uncertainty, higher freight and insurance, a weaker rupee and the growing diversion of edible oils into biofuel by major exporters such as Indonesia.

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 rises for sweets, snacks and fried foods. The duty reduction lets companies defer the planned increases and absorb part of the rise in global costs instead of passing all of it on.

"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 of Gemini Edible & Fats India. Aditya Agarwal, director of the Emami Group, which sells cooking oils under the Healthy & Tasty and Best Choice brands through Emami Agrotech, said the landed cost "which had increased by 8-11%, will now reduce".

The effective import duty on crude palm and soybean oils, counting the agriculture infrastructure and development cess and the special additional duty, now stands at 11% against 16.5%. For crude sunflower oil it has fallen to 5.5% from 16.5% after the basic customs duty was abolished. On refined oils, soybean and palm attract 30.25% against 35.75%, and refined sunflower oil 24.75%.

The relief is being measured against prices that remain well above last year's. Average retail prices of mustard, soybean and palm oils stood at Rs 202.67, Rs 167.11 and Rs 153.61 per kg on Thursday, according to the Department of Consumer Affairs' price monitoring cell — 8%, 14% and 16% higher than a year earlier.

Duty changes carry that far because India buys more than 58% of its annual edible oil requirement abroad, with palm, soybean and sunflower oils making up most of the roughly 16 million tonnes imported each year. The Solvent Extractors' Association of India said the cut could also narrow the arbitrage that draws refined oil into India from Nepal under the 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, the association's executive director.

Sudhakar Desai, president of the Indian Vegetable Oil Producers' Association, said lower duties should improve the landed cost of imported oils and bring some reduction for consumers, adding that the sharper cut on sunflower oil could make it more affordable, particularly in southern India. The government had already reduced the duty on crude sunflower, soybean and palm oils from 20% to 10% in June 2025; the latest cuts lower the tariff burden further as it works to contain domestic prices through the festive season.

Photo: CEphoto, Uwe Aranas / Wikimedia Commons (CC BY-SA 4.0)

Source: Financial Express Agriculture