In a major move to provide relief to households ahead of the upcoming festival season, the Central Government has slashed the Basic Customs Duty (BCD) on crude edible oils like crude sunflower, soybean, and palm oils from 20% to 10%. This change narrows the import duty gap between crude and refined edible oils from 8.75% to 19.25%, providing a much-needed boost to domestic refining while aiming to lower retail prices.
The decision comes after a detailed review of the sharp increase in edible oil prices since the September 2024 duty hike, coupled with volatile global market trends. The move is expected to lower the landed cost of edible oils and ease the burden of rising food inflation on consumers.
📊 Why it matters:
India is heavily dependent on imports for edible oils, with around 60% of its consumption met through imports. As per the Solvent Extractors’ Association of India, edible oil imports have shown significant variation over the past few years, influenced by global prices and domestic demand:
Data shows:
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From 2017-18 to 2021-22, India was importing a high volume of edible oils, above 130-145 lakh tonnes annually.
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In 2022-23, there was a sharp drop — total imports fell to 80 lakh tonnes.
➜ This likely reflects a combination of factors:-
High global prices made imports expensive.
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The Indian government imposed higher duties in 2024.
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Consumers may have reduced consumption.
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Increased domestic oilseed production.
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Palm oil imports especially dropped from 93 lakh tonnes → 49 lakh tonnes in 2022-23.
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Soybean and sunflower oil imports also fell sharply.
👉 Conclusion: India was trying to curb its edible oil import bill, but global price spikes + domestic inflation hurt consumers.
The graph shows:
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In early 2022 → a massive price spike — nearly $2,500/tonne for RBD palmolein, ~$2,000 for other oils.
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Reasons included:
🌍 Global supply disruptions (Ukraine war affected sunflower oil),
🚢 Shipping bottlenecks,
🌾 Poor crops in major producing countries.
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From mid-2022 onwards, prices fell steadily, reaching ~$1,000/tonne or lower by early 2023.
👉 Conclusion:
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India was importing when global prices were very high, which caused a spike in domestic retail prices of edible oils.
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Now that global prices have moderated, the new cut in customs duty will help Indian consumers benefit from lower international rates → cheaper cooking oil locally.
(source – Solvent Extractors’ Association of India)
“Trends in India’s edible oil imports and global vegetable oil prices. The recent customs duty cut aims to offset the impact of earlier price surges.”
(Source: Solvent Extractors’ Association of India)
The average global vegetable oil prices spiked sharply in early 2022, contributing to inflationary pressures in India. Though prices have moderated, Indian consumers are still grappling with high retail prices, particularly as the festival season approaches, when oil consumption typically rises.
Relief for Consumers and a Boost for Domestic Refiners
An official advisory has been issued to edible oil industry associations and stakeholders, urging them to pass on the full benefit of the duty cut to consumers without delay. The industry has been asked to adjust both Price to Distributors (PTD) and Maximum Retail Price (MRP) in line with lower landed costs, and to report weekly MRP updates to the government.
“The timely transmission of this benefit to the supply chain is imperative to ensure that consumers experience a corresponding decrease in retail prices,” said the Department of Food and Public Distribution (DFPD).
The new duty structure also aims to discourage imports of refined Palmolein, redirecting demand towards crude oils and supporting domestic refining capacity. This will not only strengthen the Indian refining industry but also help ensure fair compensation for farmers by maintaining demand for locally grown oilseeds.
Voice from the Kitchen
Consumers across India have welcomed the move, hoping to see real savings in the weeks ahead.
“With festivals like Diwali coming up, this price reduction is a big relief for us. Edible oil is something we use every day, and during festivals, we need it even more for cooking sweets and snacks. Lower prices will definitely help manage our household budget better.” said a Pune homemaker.
Customs Duty Cut on Crude Edible Oils — What It Means
🔻 Duty Reduced: 20% ➜ 10% on crude sunflower, soybean & palm oils
📈 Why: Tame rising edible oil prices, ease inflation
👉 What happens when duty is cut?
✅ Imported crude oil becomes cheaper
✅ Landed cost goes down → Retail prices should fall
✅ Bigger duty gap (19.25%) → Less refined oil imports
✅ More local refining → Indian industry benefits
✅ Helps stabilize food prices → Consumers benefit
✅ Supports fair prices for farmers indirectly
🎯 Govt asks industry to immediately reduce MRP and share updated prices weekly.
This strategic policy shift arrives at a critical time when food inflation remains a concern and festive spending is expected to surge. The government’s focus is clear: ensure that essential cooking ingredients like edible oils remain affordable for the average Indian household.
