In a significant move to support domestic edible oil refiners, the Government of India has slashed the basic customs duty on crude palm oil, crude soybean oil, and crude sunflower oil from 20% to 10%. Industry bodies have welcomed the decision, stating it will discourage the import of refined oils and strengthen the “Make in India” initiative.
The total effective import duty on these crude oils, factoring in additional charges, has dropped from 27.5% to 16.5%, creating a wider duty differential of 19.25% between crude and refined edible oils. The basic customs duty on refined edible oils remains unchanged at 32.5%, with an effective duty of 35.75%.
Industry associations such as the Solvent Extractors’ Association of India (SEA) and the Indian Vegetable Oil Producers’ Association (IVPA) have been advocating for an increased duty gap for several months. The sharp rise in refined palm oil imports—up from 20% of total palm imports in 2023–24 to nearly 27% in the first half of 2024–25—had raised concerns over the viability of the domestic refining sector.
“This is a bold and timely move,” said SEA President Sanjeev Asthana. “The widened duty differential will shift demand back to crude palm oil and revitalize India’s refining capacity without affecting overall import volumes or driving up prices.”
He added that the duty cut is likely to reduce domestic edible oil prices, ultimately benefiting consumers.
India meets more than 50% of its edible oil demand through imports. In the 2023–24 oil marketing year (November–October), the country imported 159.6 lakh tonnes of edible oils, worth ₹1.32 lakh crore.
IVPA President Sudhakar Desai praised the government for accepting its recommendation to raise the duty differential, calling it a “bold step” to prevent injury to India’s vegetable oil refining capacity.
“This is a win-win situation,” added SEA Executive Director B.V. Mehta. “Consumers benefit from lower prices, and domestic refiners are protected from the influx of cheaper refined oils.”
The SEA noted that the earlier narrow duty difference of just 8.25% inadvertently incentivized refined oil imports over crude, undermining local value addition. For example, on May 29, the cost and freight (C&F) price of refined, bleached, and deodorized (RBD) palmolien was $45 per tonne lower than crude palm oil (CPO), prompting higher imports of refined variants.
India primarily imports palm oil from Indonesia and Malaysia, while soybean oil is sourced from Brazil and Argentina.
The new duty structure is expected to realign market dynamics, promote local refining, and enhance the competitiveness of India’s vegetable oil processing industry.