Amid global tensions and persistent inflation risks, the government has made a significant decision. The Modi government has reduced the basic import duty on raw and refined edible oils. This decision, made just before the start of the holiday season, may lead to lower prices for edible oils.
The official notification of these measures was published late Wednesday evening. According to a Reuters report, prices for various types of edible oils, including palm, soy, and sunflower oil, are expected to decrease during the festive period.
As part of measures to reduce prices for the public during the holidays, the government has lowered duties on raw oils. According to the government notification, the basic import duty on raw palm oil and raw soybean oil was reduced from 10% to half, i.e., to 5%. Furthermore, the import duty on refined palm and soybean oil was lowered from 32.5% to 27.5%.
For raw sunflower oil, the import duty was reduced from 10% to zero. As for refined sunflower oil, the duty was decreased from 32.5% to 22.5%. It was also announced that the total import duty on raw palm oil and raw soybean oil will be 11%, compared to the previous 16.5%.
Over the past year, prices for vegetable oils in India have risen by approximately 20%. Thus, this substantial reduction in import duties introduced by the government should help bring down prices. This means that during the major religious holidays from September to November, consumption of sweets, snacks, and fried foods may increase.
According to traders, the rise in demand in India will support futures prices for Malaysian palm oil and US soybean oil internationally. India covers about two-thirds of its vegetable oil demand through imports. Specifically, palm, soy, and sunflower oils are imported from Malaysia, Indonesia, Argentina, Russia, and Ukraine.
Ashish Acharya, Vice President of Patanjali Foods Limited (PAFO.NS), noted that the duty reduction will benefit sunflower oil the most, making it more attractive to processors. This could potentially lead to some decrease in demand for soybean and palm oils.