The Indian government late on Friday cut the import duty on crude edible oils such as palm, soyabean and sunflower oil to 16.5 per cent overall from 27.5 per cent. However, it extended duty-free import of yellow peas until March 31, 2026.
A gazette notification said the duty cut will come into effect from May 31 (Saturday). The edible oil sector has welcomed the duty cut since it widens the duty differential between crude and edible cooking oils to 19.25 per cent.
Indian Vegetable Oils Producer Association President Sudhakar Desai said edible oil processors had been seeking an increase in the duty differential as prime palm oil-producing countries such as Malaysia and Indonesia were subsidising exports of refined, bleached and deodorised (RBD) palm oil and palmolien.
Effective duty
From May 31, crude edible oils – palm, soya, rapeseed and sunflower – will attract a basic Customs duty of 10 per cent, 5 per cent agri cess, 10 per cent social welfare cess, taking the effective duty to 16.5 per cent.
The duty on refined cooking oils – palm, soya, rapeseed and sunflower -is 32.5 per cent, with the 10 per cent social welfare cess making the effective duty 35.75 per cent.
“We were asking for a 20 per cent duty differential. After today’s revision, the differential is 19.25 per cent. We will take this,” said Desai.
The Solvent Extractors’ Association of India (SEA) said the Government’s decision to increase the duty differential between crude and refined edible oil from 8.25 per cent to 19.25 per cent will help create a level-playing field for domestic refiners and contribute to stabilising edible oil prices for Indian consumers.
Growers to benefit
Desai said it will help growers, too, as it would curb imports of refined palm oil, in particular.
As a result of these subsidies over the past year, imports of RBD increased to 35 per cent of total palm oil imports. Sanjeev Asthana, SEA President, said it will discourage imports of refined palmolien and shift demand back to crude palm oil (CPO). It will revitalise 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.
The other feature of Friday’s order is that the relief that countries such as Nepal got through the South Asian Free Trade Agreement will be reduced. Nepal had a 35 per cent duty advantage due to which at least an additional one million tonnes of palm oil was being exported to India.
Aiding refiners
“That duty advantage has been cut to some extent. It will help the industry,” the IVPA President said.
India imports a significant volume of palm oil, primarily from Indonesia and Malaysia. Historically, Indian refiners have imported CPO, and substantial investments have been made in port-based palm oil refining infrastructure to meet the growing domestic demand for palmolien. Importing CPO enables value addition within the country and supports employment generation in the refining sector, said Asthana.
The SEA president said the cost and freight price of RBD palmolien is approximately $45–50 per tonne lower than CPO. It encourage refined imports at the cost of domestic value addition.
Asthana said this trend has been exacerbated by the export policies of supplier countries, which impose higher export duties on CPO (raw material) and lower duties on refined palmolien (finished goods).
Trade upset on yellow peas move
On the other hand, the Centre’s decision to permit duty-free import of yellow peas irked the trade. “Yellow peas imports are responsible for the current bearish trend in prices of pulses. This will affect growers too, as they are getting returns below the minimum support price for crops such as chickpeas (chana/gram),” said a trader, without wishing to identify.
A trade expert said the duty-free import will favour Russia and Canada, while pulses import could rise further from the record 6.63 million tonnes in 2023-24.
Published on May 30, 2025
