Centre Reduces Basic Customs Duty on Imported Crude Edible Oils to 10% from 20%

The Government of India has recently reduced the basic customs duty (BCD) on imported crude edible oils from 20% to 10%. This policy shift intends to lower retail prices for consumers while encouraging domestic refining of edible oils such as sunflower, soybean and palm oils.

Customs Duty Reduction on Imported Crude Edible Oils to 10%

In a move to ease retail prices and boost domestic refining, the Government of India has slashed basic customs duty on imported crude edible oils from 20% to 10%. The revision covers key oils like sunflower, soybean, and palm.

The Ministry of Consumer Affairs, Food and Public Distribution announced the duty cut, which responds to rising global prices and follows a previous hike in September 2024. The reduction targets a significant decrease in the landed cost of crude edible oils, thereby easing inflationary pressures on domestic retail prices.

This measure is designed to provide relief to consumers and simultaneously maintain fair compensation for oilseed farmers across the country.

Impact on Domestic Refining and Pricing

The cut in BCD widens the import duty gap between crude and refined edible oils from 8.75% to 19.25%. This widening differential aims to incentivise refining activities within India by making imports of crude oils more economical than imports of refined products.

Industry stakeholders have been instructed to immediately pass on the benefits of the reduced duty to consumers by adjusting the Price to Distributors (PTD) and Maximum Retail Price (MRP).

Industry Consultations and Compliance

A meeting chaired by the Secretary of the Department of Food and Public Distribution involved leading edible oil industry associations. The government issued an advisory to the industry to ensure the swift transmission of duty benefits to consumers.

The industry has been asked to submit revised maximum retail prices for each brand on a weekly basis to facilitate monitoring of the price adjustments.

Read More: Block Deal: Asian Paints Share Price Gains 2% as ₹7,703 Crore Worth of Equity Changes Hands! 

Protection of Domestic Vegetable Oil Sector

The move also seeks to protect the domestic vegetable oil sector from capacity injury due to an influx of refined oil imports. According to the Indian Vegetable Oil Producers’ Association (IVPA), imports of refined palm oil have nearly doubled from 4.58 lakh tonnes during June to September 2024 to 8.24 lakh tonnes between October 2024 and February 2025.

Refined oils have been entering Indian markets under the South Asian Free Trade Area (SAFTA) provisions, where neighbouring countries enjoy zero duty on refined oil exports, resulting in significant price advantages.

Conclusion

The reduction of basic customs duty on crude edible oils from 20% to 10% is a strategic move by the Indian government to lower retail prices, encourage domestic refining and safeguard the vegetable oil sector from excessive imports of refined products. Ongoing monitoring and cooperation from the industry aim to ensure that consumers receive the benefits of this policy change.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.