Indian Government cuts import duties on edible oils
The government’s decision to reduce customs duties on specific edible-oil imports comes at an important juncture, particularly with the festive season approaching.
Lower import duties should improve the landed costs of imported edible oils which can provide some reduction in consumer prices.
For the edible-oil sector, the immediate priority is to ensure adequate availability across the country during the upcoming festival months, with higher household demand as well as increased requirements from the sweets, snacks, food-service and HORECA segments.
The revised duty structure is also significant from point of view of demand shifts. Sunflower oil duty cut has been steeper making sunflower oil more affordable especially in the major consuming region of South India.
India remains dependent on imports to meet a substantial portion of its edible-oil requirement, making the domestic market sensitive to international edible-oil prices and global supply conditions. Greater flexibility to import sunflower oil and soyabean oil will shift away demand from palm oil which is expected to be relatively expensive due to implementation B50 bio fuel mandates and cut down of the acreage expansion.
Industry especially in north and north east has been reeling under the pressure of zero duty imports from Nepal due to duty arbitrage with Indian duties which will continue as Nepal goods will still be more competitive compared to domestically refined oils. We at IVPA had been demanding an import quota on zero duty imports from SAFTA countries.
At the consumer level, however, the impact of any duty reduction will depend on several factors beyond customs duties, including international commodity prices, freight costs, exchange-rate movements, domestic availability and inventory levels.
As an industry level, we remain focused on ensuring adequate availability, efficient distribution and stable supplies during the festive season. A combination of timely imports, healthy inventories and supportive policy measures should help the market respond to seasonal demand while keeping affordability in focus at the same time supporting oilseed farmers a truly a trapeze act for the Government and Industry.