Govt slashes import duty on crude edible oil from 20% to 10% to reduce prices – What it means for domestic industries

The government has reduced the basic customs duty on crude palm oil, crude soyabean oil and crude sunflower oil by 10 per cent with the aim to bring down the prices of cooking oils and safeguard domestic processing industries, PTI reported.

Currently, India imports over 50 per cent of its demand for domestic edible oil.

According to Food Secretary Sanjeev Chopra, the government has cut down the basic custom duties on crude edible oils to 10 per cent from 20 per cent, the report said.

Solvent Extractors Association of India (SEA) executive director B V Mehta told PTI that the basic customs duty on crude palm oil, crude soyabean oil and crude sunflower oil has been slashed to 10 per cent from 20 per cent.

A notification regarding the revised rates was issued on Friday and has come into force with immediate effect.

The effective import duty, which includes basic customs duty and additional fees on these three products, now stands at 16.5 per cent, down from the previous 27.5 per cent. For refined oils, the effective duty stands at 35.75 per cent.

Impact on domestic processors

The latest development has been welcomed by the SEA and the Indian Vegetable Oil Producers’ Association (IVPA).

They were seeking an increase in the duty difference between crude and refined edible oils to protect domestic processors. According to Mehta, this duty difference will help the domestic industry utilise its refining capacity and help cut the retail prices of cooking oils.

“This is a win-win situation for vegetable oil refiners and consumers as the local price will go down due to the lower duty on crude oils,” Mehta said.

He further added that there was a higher import of refined palm oil as it is cheaper than crude palm oil. India imports palm oil from Malaysia and Indonesia.

IVPA president Sudhakar Desai thanked the government for its decision to reduce the basic import duty on crude edible oil from 20 per cent to 10 per cent.

“We thank the government for accepting the IVPA recommendation to increase the duty differential between crude and refined edible oils to 19.25 per cent,” Desai told PTI.

On September 14, 2024, the basic customs duty on crude soybean oil, crude palm oil, and crude sunflower oil increased from 0 per cent to 20 per cent, resulting in an effective duty of 27.5 per cent on crude oils. While, the basic customs duty on refined palm oil, refined sunflower oil and refined soyabean oil was raised from 12.5 per cent to 32.5 per cent, setting the effective duty on refined oils at 35.75 per cent. Notably, the basic customs duty on refined oils remains unchanged.