The government’s decision to halve basic custom duty on crude palm oil, crude soyabean oil, and crude sunflower oil has been welcomed with much cheer by edible oil industry bodies: Solvent Extractors' Association of India (SEA) and The Indian Vegetable oil Producers' Association (IVPA), who had long been advocating for lower import dependency to protect local processors’ interests.
On Friday, the government announced its decision to reduce basic custom duty on crude palm oil, crude soyabean oil and crude sunflower oil to 10 per cent from earlier 20 per cent.
The effective import duty (including basic custom duty and other charges) on these three products will now be 16.5 per cent, as against 27.5 per cent earlier.
The basic custom duty on refined oils remains unchanged at 32.5 per cent.
With a sharp rise in imports of refined palmolien in the past six months, both industry bodies have been urging the government to increase the duty difference between crude edible oils and refined edible oils.
Welcoming the decision, SEA President, Sanjeev Asthana, said, “The government’s decision to increase the duty differential from 8.25 per cent to 19.25 per cent is a bold and timely move. It will discourage imports of refined palmolien and shift demand back to crude palm oil, thereby revitalizing the domestic refining sector.”
This move will not impact the overall volume of edible oil imports and is unlikely to cause any upward pressure on edible oil prices, he said. “On the contrary, the reduction in duty on crude oil will help reduce domestic prices, benefiting consumers,” Asthana remarked.
India imports more than 50 per cent of its domestic edible oil requirement.
The country imported 159.6 lakh tonnes of edible oils during the 2023-24 oil marketing year (November to October) valuing ₹1.32 lakh crore.
India imports palm oil from Malaysia and Indonesia. Soyabean oil comes from Brazil and Argentina.
The IVPA President, Sudhakar Desai, said it is a significantly bold move towards promoting ‘Make in India’ and also protecting the sector from influx of refined oils causing capacity injury to the vegetable oil sector.
SEA Executive Director, B V Mehta, said the situation was a win-win for vegetable oil refiners and consumers as local prices will go down due to lower duty on crude oils.
SEA pointed out that the previous import duty difference of 8.25 per cent between CPO (crude palm oil) and refined palmolien had inadvertently incentivized imports of the finished product over the crude form.
As a result, during the oil year 2023-24 (November-October), refined palmolien accounted for over 20 per cent of total palm oil imports, and in the first half of oil year 2024-25 (November 2024-April 2025), its share rose to nearly 27 per cent.
On May 29, the C&F price of RBD palmolien was USD 45 per tonne lower than CPO, further encouraging refined imports at the cost of domestic value addition, the SEA added.
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