The Indian Government increased the import duty on cooking oils on Friday evening to help farmers get better prices for kharif oilseeds after the rates dropped below the minimum support price fixed for the current crop year.
The decision was part of a slew of swift moves made at Wednesday’s Cabinet Committee on Prices meeting, which was headed by Union Home and Cooperation Minister Amit Shah.
In a Gazette notification, the Government increased the basic customs duty on crude soyabean oil, crude palm oil and crude sunflower oil to 20 per cent from zero per cent currently.
AID cess to apply
It also hiked the import duty on refined palm oils, refined sunflower oils and refined soyabean oils to 32.5 per cent from 12.5 per cent currently. Over the past two sessions, edible oil prices, particularly those of the palm group of oils, have declined on fears that India is set to increase import duty.
The 5 per cent agricultural infrastructure development cess will apply in addition to the import levy. The decision to increase the Customs duty on edible oils is along with the Government’s move to scrap the minimum export duty on onion and Basmati rice, cut the wheat stock limit and allow import of yellow peas duty-free until December 31.
The duty on crude palm oil will apply at a tariff rate of $965 a tonne and on RBD Palm oil at $976. For other palm oil, it will $971 and for crude palmolein it will be $981 and for RBD palmolein $984. For crude soyabean oil, the duty will be calculated at a tariff rate of $1,011.
Political move?
While the trade has generally welcomed the decisions, they are also seen as political ones in view of the elections to assemblies in key States such as Haryana and Maharashtra.
However, the decisions have been timed with the arrival of kharif crops so that farmers will get remunerative prices.
On Wednesday, the Cabinet Committee on Prices reportedly called for all records on edible oil, onion, basmati rice, non-basmati rice, sugar and ethanol. Union Minister for Road Transport and Highways Nitin Gadkari was also invited for the meeting - a pointer that a positive decision on onion exports was likely.
Pressure has been mounting on the Government after soyabean prices dropped below the minimum support price of ₹4,892 a quintal fixed for the current crop year (July 2024-June 2025).
The Ministry of Agriculture and Farmers’ Welfare has allowed Karnataka, Maharashtra, Telangana and Madhya Pradesh to procure soyabean at MSP under the price stabilisation scheme.
Win-Win for all
The Solvent Extractors Association (SEA) has said the best solutions to tackle oilseed prices dropping below MSP was to increase import duty on crude edible oils and refined oils by 20-25 per cent across the board with a duty difference of minimum 15 per cent.
“This will translate into remunerative price to farmers for their produce and the market forces will able to pay above MSP price to the farmers. At the same time, the Government will not have to procure it at MSP. It will be win-win situation for farmers, industry and the government”, SEA executive director BV Mehta said in a statement on Thursday.
India permitted duty-free imports of edible oils in May 2022 after their prices surged globally due to supply shortages. The impact of El Nino on oilseed production forced the Centre to permit it at least till March 2025.
However, a record soyabean crop in the US and falling oilseeds and cooking oil prices in the global market resulted in domestic oilseeds prices crashing and the resultant hike in duty.