India is likely to raise import taxes on vegetable oils for the second time in less than six months to support thousands of oilseed farmers grappling with plummeting domestic prices, according to two government sources.
The proposed hike in import duties by the world’s largest edible oil importer is expected to boost local vegetable oil and oilseed prices, while potentially reducing demand and lowering overseas purchases of palm oil, soyoil, and sunflower oil.
“Inter-ministerial consultations regarding the duty hike are over,” said a government source, speaking anonymously. “The government is soon expected to announce the increased duties.”
The final decision will consider the potential impact on food inflation, another government source confirmed. A government spokesperson did not immediately respond to requests for comment.
In September 2024, India imposed a 20% basic customs duty on both crude and refined vegetable oils. Post-revision, crude palm oil, crude soyoil, and crude sunflower oil faced a 27.5% import duty, up from 5.5%, while refined versions of these oils were taxed at 35.75%.
Despite the previous duty hike, soybean prices are still trading more than 10% below the government’s minimum support price (MSP). Currently, domestic soybean prices hover around ₹4,300 ($49.64) per 100 kg, compared to the MSP of ₹4,892.
Traders also anticipate that prices of winter-sown rapeseed will drop further as new-season supplies enter the market next month.
“Given the lower oilseed prices, raising import duties on edible oils is a logical step,” said one of the officials, though the exact increase has yet to be finalized.
B.V. Mehta, Executive Director of the Solvent Extractors' Association of India, emphasized the urgency of the move: “Oilseed farmers are under pressure and need support to sustain their interest in oilseed cultivation.”
This anticipated duty hike could reshape the edible oil market, potentially boosting domestic prices while reducing India’s reliance on imported oils.