- India may cut import duties on vegetable oils to curb rising domestic prices ahead of festivals
- Vegetable oil prices have increased about 20% in India over the past year
- India imports nearly two-thirds of its vegetable oil demand, mainly palm, soy, and sunflower oils
India is considering cutting import duties on vegetable oils to contain rising domestic prices and ease food inflation ahead of the festive season, Reuters reported, citing two government and two industry sources.
Vegetable oil prices in India have risen nearly 20% over the past year, raising concerns as demand typically picks up during the September-November festive period. Lower import duties could bring down domestic prices and encourage consumption of edible oils used in sweets, snacks and fried foods.
India, the world's biggest vegetable oil importer, meets nearly two-thirds of its demand through imports. Palm oil, soyoil and sunflower oil are the key imported varieties, with supplies coming mainly from Malaysia, Indonesia, Argentina, Russia and Ukraine.
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Reuters citing a government source reported that the government was looking to protect consumers while also safeguarding farmers' interests.
Rather than making a deep cut in import duties, the government could reduce the basic import duty by 5%, a senior industry official told Reuters. Such a move would help keep domestic soybean prices above government-set support levels and provide some protection to oilseed farmers.
However, the industry official cautioned that lower import duties could spur Indian demand and push up prices in exporting countries, potentially limiting the impact of the measure.
India had halved the basic import duty on crude edible oils to 10% in May 2025. After factoring in the Agriculture Infrastructure and Development Cess and Social Welfare Surcharge, the effective total import duty on crude palm oil, soyoil and sunflower oil stood at 16.5%.
Global palm oil and soyoil prices subsequently moved higher after the 2025 duty reduction, according to Reuters.
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The consideration comes as India's retail inflation accelerated in August, with higher food prices contributing to the increase. The government has not officially commented on the proposed duty changes.
Beyond domestic prices, any reduction in India's import duties could also have implications for global edible oil markets. Higher Indian demand is expected to support benchmark Malaysian palm oil and US soyoil futures, analysts said.
Vegetable oil prices globally have also been affected by disruptions linked to the Russia-Ukraine war and extreme weather associated with El Niño and climate change.
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