NITI Aayog for higher import duty on edible oils to achieve self sufficiency

NITI Aayog has released a report on ways to achieve self-sufficiency in edible oil wherein it has sought higher duties on imported oils from current 5.5 per cent and a substantial duty gap between crude and refined oil.

The Aayog, in a report titled “Pathways and Strategy for Accelerating Growth in Edible Oil towards Goal of Atmanirbhartar”, has said leveraging public-private partnerships is crucial for accelerating edible oil production, utilising private sector expertise in technology, marketing, seed production, and area promotion across all oilseed crops, including oil palm, with buy-back arrangements.

India currently fulfils only 40-45 per cent of its edible oil requirements through domestic production, presenting a significant challenge to the nation’s ‘self-sufficiency’ goal.

Duty hike mooted

The Agriculture Ministry is believed to have has suggested a hike in import duty of edible oils to protect the domestic farmers so that they receive at least the minimum support prices for the oilseed crop and it is hopeful of a favourable decision soon.

The Food Ministry is not averse to a hike as it also wants farmers to be encouraged to grow more oilseeds, particularly in view of upcoming Rabi sowing season when India’s largest oilseed crop mustard will be sown, sources said. However, a final call on duty will be taken by the Committee of Ministers, headed by Cooperation Minister Amit Shah, the sources added.

Currently, the import duty (including cess) on crude form of palm oil, soyabean oil and sunflower oil is 5.5 per cent and on refined variety of these three oils 13.75 per cent. Industry officials said there is zero duty on import of crude edible oil, which is very rare in any country and unless it is raised, farmers would not be motivated to grow oilseeds.

Lower than MSP

As a result of zero duty (without cess) on imported oils, the fresh harvested soyabean is selling at an average ₹4,150/quintal in Madhya Pradesh and at ₹4,185/quintal in Maharashtra, as against its MSP of ₹4,892.

“A flexible tariff structure, responsive to global market prices, domestic supply and demand trends, and the Minimum Support Price (MSP) for oilseeds, offers a strategic approach,” the NITI report said. It further said that implementing a higher import duty regime can safeguard domestic production, while a substantial duty gap between crude and refined oil will benefit processing industries.

The report also suggested that aligning support prices with the import duty structure will support farmers, processors, and consumers alike.

Over the past decades, per capita consumption of edible oil has witnessed a dramatic rise, reaching 19.7 kg/year. This surge has outpaced domestic production and has translated into a heavy reliance on imports to meet domestic demand and industrial needs.

It recommended that customised cluster technology needs to be developed to improve yield and establish AgroEcological Sub Region (AESR)-based crop-specific model farms to facilitate the horizontal spread of advanced technologies.