New Delhi: In a move to alleviate the financial burden on consumers and stabilise soaring edible oil prices, the Indian government has reduced the Basic Customs Duty (BCD) on major imported crude edible oils—sunflower, soybean, and palm oils—from 20% to 10%. This policy shift, effective immediately, increases the import duty differential between crude and refined edible oils from 8.75% to 19.25%, aiming to encourage domestic refining and provide relief to households grappling with rising food inflation.
The decision follows a sharp escalation in edible oil prices triggered by a September 2024 duty hike and concurrent spikes in international market prices. The Ministry of Consumer Affairs, Food & Public Distribution issued an advisory to edible oil associations and industry stakeholders, mandating that the benefits of the reduced duty be fully passed on to consumers. The ministry emphasised the need for immediate adjustments in the Price to Distributors (PTD) and Maximum Retail Price (MRP) to reflect the lower landed costs of crude oils.
A high-level meeting, chaired by the Secretary of the Department of Food and Public Distribution, was convened with leading edible oil industry associations to ensure compliance. The ministry has directed these associations to instruct their members to implement price reductions promptly and submit weekly brand-wise MRP sheets using a prescribed format. This measure aims to ensure transparency and swift transmission of cost benefits through the supply chain, ultimately reducing retail prices for consumers.
The revised duty structure is designed to discourage imports of refined oils, such as palmolein, and boost demand for crude edible oils, particularly crude palm oil. By doing so, the government seeks to revitalise India’s domestic refining sector, enhance capacity utilisation, and ensure fair compensation for farmers. The increased duty differential is expected to create a level playing field for domestic refiners while addressing inflationary pressures that have strained household budgets.
This policy intervention comes after a detailed review of the edible oil market, which saw significant price surges following last year’s duty hike. The resultant inflationary pressure contributed to a broader rise in food inflation, prompting the government to act decisively. By lowering the import duty on crude oils, the Centre aims to reduce the landed cost of edible oils, thereby cooling retail prices and providing much-needed relief to consumers.
The government’s move seeks to balance consumer affordability with the growth of the domestic refining industry. As the edible oil sector adjusts to the new duty structure, consumers can expect more affordable prices at retail, while domestic refiners gain a competitive edge in the market.
– global bihari bureau
