Centre cuts import duty on palm, soybean and sunflower oils to ease cooking oil prices

The Centre Wednesday cut basic customs duty on major imported edible oils, including palm, soybean and sunflower oils, in a move aimed at bringing down their landed cost and providing relief to consumers ahead of the peak festive season.

The revised duty structure will take effect from September 24. Under the changes, the basic customs duty (BCD) on crude palm oil and crude soybean oil has been halved from 10 per cent to 5 per cent, while the levy on crude sunflower oil has been abolished from the existing 10 per cent.

The government has also reduced duties on refined edible oils. BCD on refined palm oil and refined soybean oil has been lowered from 32.5 per cent to 27.5 per cent, while refined sunflower oil has received a larger reduction from 32.5 per cent to 22.5 per cent.

Sunflower oil gets biggest cut

Among the three major edible oils, sunflower oil has received the steepest duty reduction. With BCD on the crude variety falling to zero and that on refined sunflower oil declining by 10 percentage points, the move could translate into lower import costs for processors and distributors.

For palm and soybean oil, both crude and refined varieties have received a five-percentage-point reduction.

The immediate effect will be a reduction in the tax component of imported edible oils. The extent and timing of any fall in retail prices, however, will depend on global oil prices, currency movements, freight costs, existing inventories and how much of the duty benefit is passed through the supply chain.

India is heavily dependent on imports to meet its edible oil requirement, making domestic prices sensitive to movements in international markets. Palm oil, soybean oil and sunflower oil together account for the bulk of the country’s edible oil imports.

Prices had been under pressure

The decision comes after edible oil prices came under renewed pressure from rising international prices, higher landed costs and a weaker rupee. The increases had raised concerns ahead of the festival season, when demand for cooking oils typically strengthens.

Domestic vegetable oil prices have risen significantly over the past year, while edible oil companies had been weighing further price increases because of higher import costs. With India importing well over half of its edible oil requirement, sustained increases in international prices can quickly feed into household food bills.

The duty reduction gives the government a direct way of cushioning some of that impact by lowering the cost at which imported oil enters the domestic market.

Import duty has been used repeatedly as a policy lever to balance consumer prices, domestic oilseed growers and the refining industry. A lower duty can help consumers when global prices are elevated, but policymakers must also consider its impact on domestic oilseed prices and farmers.

Festive-season relief in focus

The latest intervention comes at a time when the government is closely watching food inflation and the impact of higher commodity prices on household budgets.

Cooking oils have a broad impact on food costs because they are used extensively by households as well as restaurants, packaged-food manufacturers and other food businesses. A sustained decline in edible oil prices can therefore have an impact beyond the retail price of individual oil packs.

The Centre had previously reduced the BCD on crude palm, soybean and sunflower oils from 20 per cent to 10 per cent in 2025 as it sought to moderate domestic prices while maintaining a sufficient duty differential between crude and refined oils to encourage processing within India.

Wednesday’s decision goes further by reducing the tariff on crude palm and soybean oils to 5 per cent and eliminating it altogether on crude sunflower oil.

Whether consumers see the full benefit will now depend on the movement of international prices and the speed with which importers, refiners and retailers transmit the lower duty through the supply chain.