Import duty cut on crude edible oils will protect local processors: Industry bodies

Time of India

2 days ago

Edible oil industry bodies SEA and IVPA have hailed the government's decision to cut basic custom duty on crude oils to 10 per cent, saying the move will discourage imports of finished products and safeguard the interests of domestic refiners.
On Friday, the government reduced the 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.
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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,
Solvent Extractors Association of India
(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."
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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 said.
India imports more than 50 per cent of its domestic edible oil requirement.
India imported 159.6 lakh tonnes of edible oils during the 2023-24 oil marketing year (November to October) valuing Rs 1.32 lakh crore.
The basic custom duty on refined oils remains unchanged at 32.5 per cent.
At present, the effective duty on refined oils is 35.75 per cent.
The
Indian Vegetable Oil Producers' Association
(IVPA) President Sudhakar Desai said, "We thank the government for accepting the IVPA recommendation to increase the duty differential between crude and refined edible oil to 19.25 per cent."
It is a significantly bold move towards ensuring Make in India and also protecting the sector from influx of refined oils causing capacity injury to the vegetable oil sector, Desai said.
"This is a win-win situation for vegetable oil refiners and consumers, as local prices will go down due to lower duty on crude oils," SEA Executive Director B V Mehta said.
India imports palm oil from Malaysia and Indonesia. Soyabean oil comes from Brazil and Argentina.
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.