Govt cuts customs duty on edible oil ahead of festive season

India has cut the basic customs duty on crude and refined edible oils, including palm, soybean and sunflower oil, in a move aimed at easing domestic prices and improving supplies ahead of the festive season. The revised rates will take effect from September 24, according to a Finance Ministry notification.

Vegetable oil prices in India have risen nearly 20% over the past year, while demand typically increases between September and November as consumption of sweets, snacks and fried foods rises during major festivals.

Under the revised structure, the basic customs duty on crude palm oil and crude soybean oil has been reduced to 5% from 10%. Refined palm and soybean oil duty has been cut to 27.5% from 32.5%.

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The duty on crude sunflower oil has been reduced to nil from 10%, while that on refined sunflower oil has been lowered to 22.5% from 32.5%.

Including the Agriculture Infrastructure and Development Cess and Social Welfare Surcharge, the total import duty on crude palm and soybean oil will fall to 11% from 16.5%. Crude sunflower oil will attract a 5.5% duty, down from 16.5%.

Industry participants expect the cuts to improve landed costs, support imports and influence demand across different edible oils. Sunflower oil is expected to benefit particularly from the sharper reduction in duties.

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India imports nearly two-thirds of its vegetable oil requirement, mainly palm, soybean and sunflower oil, from countries including Malaysia, Indonesia, Argentina, Russia, Ukraine and Brazil.

Industry representatives said refiners that had delayed purchases in anticipation of the duty reduction are likely to increase imports to meet festive demand. However, the impact on retail prices will also depend on international commodity prices, freight costs, exchange rates, domestic availability and inventories.

According to the Solvent Extractors' Association, India's edible oil import bill is estimated to rise 9% to ₹1.75 lakh crore in the current marketing year ending October, driven by higher volumes and rupee depreciation. Between November and August, vegetable oil imports rose 4% to 138.8 lakh tonnes from 133.37 lakh tonnes a year earlier.

(With agency inputs)

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