Basic Customs Duty Reduced on Imported Crude Edible Oils From 20% to 10%

The central government has reduced the Basic Customs Duty (BCD) on some crude edible oils, including crude sunflower oil, soybean oil, and palm oil, from 20% to 10%. This change increases the difference in import duty between crude and refined edible oils from 8.75% to 19.25%.

The decision to reduce the duty on imported crude edible oils came after a careful analysis of how the previous duty increase caused a sharp rise in edible oil prices, resulting in higher food inflation.

A meeting with the Edible Oil Industry Associations and companies was scheduled. This was chaired by the Secretary of the Department of Food and Public Distribution (DFPD), Government of India. During the meeting, an advisory was issued, asking them to pass on the benefits of the reduced customs duty to consumers. Industry stakeholders are likely to revise their Price to Distributors (PTD) and Maximum Retail Price (MRP) based on the lower landed costs. The Associations have also been asked to instruct their members to cut prices without delay and to submit updated brand-wise MRP sheets to the Department every week. The DFPD has shared a format with the industry for sharing the revised PTD and MRP details.

This change focuses on controlling rising edible oil prices caused by last year’s duty increase in September 2024 and the rise in foreign market prices. An advisory has been sent to the edible oil industry and associations to make sure that the benefit of reduced duty is availed by the consumers.

This new duty rule will discourage the import of refined Palmolein and increase demand for crude oils, especially Crude Palm Oil, helping to restore the domestic refining industry. The policy helps create fair competition for local refiners and helps in keeping prices stable for Indian buyers.

The 19.25% difference in duty between crude and refined oils will promote domestic refining capacity utilisation and cut imports of refined oils. The import duty affects the landed cost of edible oils. Therefore, by reducing import duty on crude oils, the government is targeting to lower the landed cost and the retail price of edible oils and give relief to consumers, while also supporting local refiners and maintaining fair compensation for the farmers.