Price Relief on the Menu: India Halves Import Tax on Cooking Oils

In a decisive move to lower food inflation and ease the burden on consumers, the Indian government has slashed the import tax on crude edible oils, effective May 30, 2025. The basic customs duty on crude palm oil, crude soyoil, and crude sunflower oil has been halved from 20% to 10%, significantly reducing the overall import levy when including other charges.

 

Key Highlights

 

•⁠  ⁠Immediate Duty Cut: The basic import duty on key crude edible oils dropped from 20% to 10%, with the total effective import duty (including Agriculture Infrastructure and Development Cess and Social Welfare Surcharge) falling from 27.5% to 16.5%.

 

•⁠  ⁠Consumer Relief: The reduction is expected to lower domestic edible oil prices, providing relief to households and food processors facing high input costs.

 

•⁠  ⁠Boost to Imports: India, which relies on imports for over 70% of its edible oil needs, is likely to increase purchases of palm oil from Indonesia and Malaysia, and soyoil and sunflower oil from Argentina, Brazil, Russia, and Ukraine.

 

•⁠  ⁠Extended Duty-Free Window: The government also extended the duty-free import window for yellow peas until March 31, 2026, supporting additional food supply.

 

•⁠  ⁠Surcharge Adjustment: The Social Welfare Surcharge on these oils has been reduced from 2.5% to 1.5%.

 

Outlook

 

The move is set to stimulate demand for imported edible oils and help stabilize domestic prices amid global supply fluctuations. While consumers and food processors stand to benefit, the policy shift may pose challenges for local oilseed farmers, who could see reduced demand for their produce. The government’s proactive stance aims to balance consumer interests with the need for agricultural sector support, signaling continued vigilance over food inflation and supply chain stability.

 

Source: Reuters, Economic Times, CNBC-TV18