The government’s move to cut basic custom duty on crude palm, soybean and sunflower oils to 10% from 20% will restrict import of refined oils and boost domestic processing, industry associations — Solvent Extractors Association of India (SEA) and Indian Vegetable Oil Producers’ Association (IVPA) have stated. “This is a win-win situation for veg oil refiners as well as consumers, as local price will go down due to lower duty on crude oils,” BV Mehta, executive director, SEA, said.

Following the announcement of import duties on Friday, the effective import duty, including basic custom duty and cess, on these three oils is reduced to 16.5% from 27.5% earlier. Sources said the reduction in duty was because of a sharp rise in prices of edible oils in the recent months, while retail inflation in ‘oils and fats’ category was highest in the food basket at 17.42% in May.

However, the basic custom duty on refined oils remains unchanged at 32.5%. India imports around 57% of its edible oils — palm, soybean and sunflower consumption of around 25 million tonne (MT).

“This move will not just strengthen the domestic refining capacities of Indian refiners but also ensure fair price to oilseed farmers and a fair price to the consumers,” Sudhakar Desai, president, IVPA said.

With a sharp rise in imports of refined palm oil in the past six months, both industry associations have been urging the government to increase the duty difference between crude cooking oils and refined edible oils.

Last September, the government had raised import duties on crude oils to 27.5% from 5.5%, while duties on refined edible oil rose to 35.75% from 13.75% aimed at boosting domestic production.

However, Soybean Processor Association of India (SOPA) has questioned the government’s move to reduce import duties after significantly increasing the minimum support price of kharif oilseeds — soybean and groundnut aimed at boosting output.

“Duty reduction on edible oils is a step against local crushing and farmers. It helps the import lobby at the cost of industry, and will be a huge setback for the goal of self-sufficiency in edible oils,” DN Pathak, executive director, SOPA, said.

India imported 15.96 MT of edible oils during the 2023-24 oil year (November to October) valued at Rs 1.32 lakh crore. In the first six months of the oil year (November – April), cooking oil imports declined by 8% to 6.5 MT on year, the SEA has stated.

India imports crude palm oils from Malaysia and Indonesia while soybean and sunflower oils are imported by Argentina, Brazil, Russia and Ukraine.