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India cuts import duty on crude vegetable oils to 10% to control prices and support demand
Soybean processors warn of impact on oilseed farmers, while others see it as a boost for domestic refining capacity
The move is expected to lower vegetable oil prices and lift demand, thereby boosting India's overseas purchases of palm oil, soybean oil and sunflower oil.
In a step aimed at curbing inflation in the oils and fats sector, India has cut the basic customs duty on crude and refined vegetable oils by 10 percentage points, a move that will also help support the domestic refining industry.
The government said in an official notification that the basic customs duty on crude palm oil, crude soybean oil and crude sunflower oil had been reduced to 10% from 20%.
As a result, the total levy on these three oils will fall to 16.5% from 27.5% previously, after accounting for the additional Agriculture Infrastructure and Development Cess and social welfare surcharge.
In April 2025, food inflation (based on the Consumer Price Index) eased to just 1.78%, down from 2.69% in March 2025. Oils and fats, along with fruit, were the only two categories to record double-digit inflation in April.
Commenting on the decision, Sudhakar Desai, president of the Indian Vegetable Oil Producers' Association (IVPA), welcomed the move, saying that cutting the basic import duty on crude vegetable oils from 20% to 10%, while keeping the effective duty on refined oils at 35.25%, would widen the duty differential between crude and refined oils to 19.25%.
He added: "This is a bold decision that supports the 'Make in India' initiative and prevents an influx of refined oils that harms domestic refining capacity. It also strengthens local refiners' capabilities and ensures fair prices for both farmers and consumers."
According to IVPA data, imports of refined palm oil jumped from 458,000 tonnes between June and September 2024 to 824,000 tonnes between October 2024 and February 2025, accounting for around 30% of total palm oil imports during that period.
The association also noted that the South Asian Free Trade Area (SAFTA) agreement, which allows refined oils from neighbouring countries to enter duty-free, had led to the Indian market being flooded, taking advantage of the wide duty gap.
However, not everyone agreed on the merits of the decision. The Indore-based Soybean Processors Association of India (SOPA) said in a statement that cutting duties on vegetable oils was a "blow" to the domestic crushing industry and oilseed farmers.
SOPA added that the decision served the interests of the import lobby at the expense of domestic industry and marked a major setback to the goal of achieving self-sufficiency in vegetable oil production.
The statement concluded by asking: "It is surprising that the government would take such a decision just one day after raising the Minimum Support Price (MSP)."