Will duty cuts on cooking oil bring relief to customers? Know what govt & industry said

The government on Wednesday cut import duties on crude sunflower, soybean and palm oils, which is expected to lower the retail prices of cooking oils ahead of the festive season.

The basic customs duty (BCD) on crude sunflower oil has been reduced from 10% to nil, while that on crude soybean and crude palm oil has been cut to 5% from 10%.

The government has also reduced the duty on the corresponding refined edible oils while retaining a 19.25 percentage point differential between crude and refined oils.

But whether the duty cuts translate into a sizeable reduction in retail prices will depend on several factors, including global edible oil prices, freight rates, the rupee's exchange rate, domestic availability and inventories, industry representatives said.

The government said the duty reduction is intended to lower the landed cost of imported edible oils and facilitate transmission of the benefit through the domestic supply chain.

It has advised edible oil associations and industry stakeholders to immediately revise their Price to Distributors (PTD) and maximum retail prices (MRPs) in line with the lower landed costs.

"The Government has also issued an advisory to edible oil associations and industry stakeholders to ensure that the full benefit arising from the reduction in import duty is passed on to consumers," the consumer affairs ministry said.

How much relief can consumers expect?

A reduction in import duty lowers the tax component of the landed cost of imported oil. In principle, this gives importers and refiners room to reduce prices.

However, the extent of the reduction at the retail level will not depend on customs duty alone.

Sudhakar Desai, president of the Indian Vegetable Oil Producers' Association (IVPA), said lower import duties "should improve the landed costs of imported edible oils, which can provide some reduction in consumer prices".

He, however, pointed to other factors that could affect the final price paid by consumers.

"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," Desai said.

This means consumers may see some reduction in cooking oil prices, but the extent and timing of the benefit could vary across oils and markets.

Sunflower oil got the biggest duty cut

The duty reduction is steeper for crude sunflower oil, for which the BCD has been brought down to zero from 10%.

"Sunflower oil duty cut has been steeper, making sunflower oil more affordable, especially in the major consuming region of South India," Desai said.

The industry also expects the change in relative prices to influence consumer demand.

"Greater flexibility to import sunflower oil and soyabean oil will shift demand away from palm oil, which is expected to be relatively expensive due to the implementation of B50 biofuel mandates and a cut down of the acreage expansion," Desai said.

Why maintain a higher duty on refined oil?

The government has retained a 19.25 percentage point differential between crude and refined edible oils.

The objective is to encourage imports of crude oils that can be processed domestically rather than allowing a surge in imports of already-refined products.

“The Government has maintained the duty differential between crude and refined edible oils to support the utilisation of domestic refining capacity and discourage excessive imports of refined edible oils,” the ministry said.

“The measure is expected to provide a more level playing field for domestic refiners while supporting continued value addition within the country,” it added.

Festive demand adds pressure

The duty cuts come just ahead of the festive season, when demand for edible oils typically rises from households as well as sweet and snack makers, restaurants and the wider food-service and HORECA segment.

Desai said that the immediate priority is to ensure adequate availability across the country during the upcoming festival months.

The impact of global prices on Indian cooking oil prices is particularly important because the country imports a substantial portion of its edible oil requirement.

According to the industry body SEA, India's edible oil import bill is estimated to rise 9% to ₹1.75 lakh crore in the current marketing year ending October on higher import volumes and rupee depreciation.

During November-August of the 2025-26 oil year, total vegetable oil imports rose 4% to 138.8 lakh tonnes from 133.37 lakh tonnes in the corresponding period a year earlier.

Vegetable oil imports include both edible and non-edible oils.

India imports palm oil mainly from Malaysia and Indonesia, while soybean oil is sourced from Argentina and Brazil.

“The Government will continue to monitor developments in international edible oil markets and domestic prices and will take appropriate measures, as necessary, to safeguard the interests of consumers while maintaining a balanced policy environment for farmers and the domestic edible oil industry,” the ministry said.