India
oi-Madhuri Adnal
Cooking oil prices may see some relief after the Centre reduced the basic customs duty on several imported edible oils.
The revised duties will come into effect from September 24, according to a Finance Ministry notification cited by ANI.
India reduced import duties on key edible oils like soybean, palm, and sunflower oil effective September 24, cutting rates for crude varieties to 5% or 0% to lower import costs and potentially consumer prices.
The basic customs duty on crude soybean oil and crude palm oil has been brought down from 10 per cent to 5 per cent. The duty on refined soybean oil and refined palm oil has also been reduced, from 32.5 per cent to 27.5 per cent.
Crude sunflower oil has received the biggest cut. The government has removed the 10 per cent duty on crude sunflower oil altogether, bringing it to zero.
The duty on refined sunflower oil has been reduced from 32.5 per cent to 22.5 per cent.
The move is expected to bring down the cost of importing edible oils into India. That could eventually translate into lower prices for households, although the actual reduction at the retail level will depend on how much of the benefit is passed on by importers, refiners, distributors and retailers.
Why cooking oil prices matter now
The duty reduction comes at a time when edible oil prices have already climbed significantly.
Vegetable oil prices in India have risen by nearly 20 per cent over the past year, according to Reuters. The Centre’s move comes just ahead of the festive season, when demand for cooking oil generally picks up as households buy more sweets, snacks and fried foods.
A reduction in import costs could therefore offer some relief to consumers during a period when food demand is typically higher.
The move could also influence global edible oil markets. Analysts cited by Reuters said stronger Indian demand could provide support to Malaysian palm oil and US soyoil futures.
India imports a large part of the edible oil it consumes. Nearly two-thirds of the country’s vegetable oil requirement is met through imports, with palm oil, soybean oil and sunflower oil accounting for much of the supply.
The country sources edible oils from major producers such as Malaysia, Indonesia, Argentina, Russia and Ukraine.
Because India depends so heavily on overseas supplies, changes in international prices, freight costs, currency movements and import duties can all influence what consumers eventually pay.
The latest duty cuts are therefore expected to reduce the cost burden on importers. But whether shoppers see an immediate fall in cooking oil prices will depend on how quickly the lower import cost moves through the supply chain.
