Government Slashes Edible Oil Import Duty to Ease Consumer Prices

New Delhi: In a move aimed at containing rising edible oil prices, the Centre has lowered the Basic Customs Duty (BCD) on imports of key crude edible oils, citing the recent surge in global prices and its impact on the domestic market.

Under the revised duty structure, crude sunflower oil will now attract zero Basic Customs Duty, compared with the earlier rate of 10%. The duty on crude soybean oil and crude palm oil has been brought down from 10% to 5%.

The government has also made corresponding changes to the duty applicable to refined edible oils while retaining a 19.25% duty gap between crude and refined oils.

Move aimed at lowering landed costs

The latest decision comes against the backdrop of higher international edible oil prices, which have pushed up the cost of imported oils and contributed to increases in domestic prices.

Since customs duty forms part of the overall landed cost of imported edible oils, the government expects the reduction in duty on crude varieties to bring down import costs. The lower costs are expected to move through the supply chain and eventually offer some relief to consumers.

The measure is also intended to help contain pressure on food prices and contribute to efforts to keep overall inflation under control.

Government retains protection for domestic refiners

While reducing duties on crude oils, the government has retained the differential between crude and refined edible oils at 19.25%.

The structure is aimed at encouraging the use of domestic refining facilities and limiting excessive dependence on imports of already-refined edible oils. The policy is also expected to provide domestic refiners with greater room to compete while encouraging value addition within India.

Industry asked to pass on duty benefit

Alongside the duty reduction, the government has asked edible oil associations and industry players to ensure that consumers receive the benefit of the lower import costs.

Companies have been advised to review their Price to Distributors (PTD) and Maximum Retail Price (MRP) in line with the reduction in landed costs. Industry associations have also been asked to communicate the revised pricing requirements to their members and ensure that the changes are implemented promptly.

The Centre said it will continue to track developments in global edible oil prices as well as the domestic market. Further action may be considered if required to protect consumer interests while maintaining a balanced approach towards farmers and India’s edible oil processing industry.