The Ministry of Finance on Wednesday notified a reduction in import duties on crude and refined soybean, palm and sunflower oils.
The government also scrapped the basic customs duty (BCD) on crude sunflower oil. The reductions, notified by the Department of Revenue, will be effective from September 24.
The duty on sunflower oil has been removed completely, allowing the import to happen at zero duty from 10% previously, while the BCD on refined sunflower oil has been reduced from 32.5% to 22.5%.
The central government has reduced the basic customs BCD on crude soybean oil and crude palm oil from 10% to 5%, while the duty on their refined variants like refined soybean oil and refined palm oil has been cut from 32.5% to 27.5%.
The duty cuts come against the backdrop of India’s dependence on imported edible oils to meet domestic consumption. Changes in import duties can help reduce the landed cost of oils and, depending on global prices, currency movements and the extent to which the reduction is passed down to the domestic prices. With the duty cuts on edible oil, the prices of edible oil are likely to soften, depending on how the reduction trickles down through the supply chain and eases the price pressure on retail consumers.
The announcement by the Ministry came at a time when India’s edible oil companies planned to raise prices by around 7-8% ahead of the festive season. Previously, media reported that due to higher import costs, the companies' margins were being squeezed.
