Customs duty on crude edible oils cut from 20% to 10%

The Centre on Wednesday reduced the Basic Customs Duty (BCD) on crude edible oils, namely crude sunflower, soybean and palm oils, from 20% to 10% resulting in the import duty differential between crude and refined edible oils from 8.75% to 19.25%.

The adjustment aims to address the escalating edible oil prices resulting from the September 2024 duty hike and concurrent increases in international market prices.

An advisory has been issued to edible oil associations and industry stakeholders to ensure that the full benefit of the reduced duty is passed on to consumers.

”A 19.25% duty differential between crude and refined oils helps to encourage domestic refining capacity utilization and reduce imports of refined oils. Import duty on edible oils is one of the important factors that impacted landed cost of edible oils and thereby domestic prices,” a government statement said.

By lowering the import duty on crude oils, the government aims to reduce the landed cost and retail prices of edible oils, providing relief to consumers and helping to cool overall inflation.

The reduced duty will also encourage domestic refining and maintain fair compensation for farmers.

The revised duty structure will discourage the import of refined Palmolein and redirect demand towards Crude Edible Oils Especially Crude Palm Oil, thereby strengthening and revitalizing the domestic refining sector, officials said.

They said the policy intervention not only ensures a level playing field for domestic refiners but also contributes to the stabilisation of edible oil prices for Indian consumers.

A meeting with leading Edible Oil Industry Associations and industry was held under the Chairmanship of Secretary, Department of Food and Public Distribution and advisory issued to them to pass on the benefits from this duty reduction on to consumers.

This decision comes after a detailed review of the sharp rise in edible oil prices following last year’s duty hike. The increase led to significant inflationary pressure on consumers, with retail edible oil prices soaring and contributing to rising food inflation.