Import duty on edible oils likely to increase once again

22-Feb-2025 03:45 PM

The Indian government is considering increasing the customs duty on the import of edible oils once again in a bid to improve prices for domestic oilseed producers.

This comes in light of the current weak market prices of key oilseeds like soybean and groundnut, which are already running below the minimum support price (MSP).

Additionally, mustard, a major Rabi season oilseed, has started arriving in the market, which could put further pressure on prices.

Despite the 20% increase in import duties in September 2024, the impact on prices has been minimal so far.

The government hopes that by raising duties again, the domestic prices of edible oils like palm, soybean, and sunflower will rise, making it more attractive for crushers and processors to purchase domestic oilseeds at higher prices. This could, in turn, benefit farmers by ensuring they get profitable prices.

The government has been actively purchasing record quantities of soybean and groundnut at MSP to support farmers and may continue to do so for mustard as well if market prices stay low.

The rise in the MSP for mustard, from Rs 5650 to Rs 5950 per quintal, indicates the government’s intent to safeguard farmers' interests.

If customs duties are increased, imports of edible oils like palm oil could become costlier, potentially reducing demand and import volumes.

However, previous duty hikes have not yielded favorable results, so the government remains cautious but hopeful that this time, the strategy may work better.