Soyabean, sunflower, palm oil imports get cheaper as government cuts duties

With the festival season approaching, soya-bean oil, palm oil and sunflower oil imports to India will attract lower customs duties from today.

In a notification issued on September 23, the central government has cut the customs duty on crude soya-bean oil from 10% to 5%, edible-grade soya-bean oil and its fractions from 32.5% to 27.5%, crude palm oil from 10% to 5% and palm oil, and its fractions other than crude from 32.5% to 27.5%. It made import of crude sunflower seed oil and its fractions (that are not chemically modified) duty free from 10% and cut duty on edible grade sunflower oil from 32.5% to 22.5%.

The lower customs duties on specific edible-oil imports is expected to improve the landed costs of imported edible oils which in turn can provide some reduction in consumer prices.

“For the edible-oil sector, the immediate priority is to ensure adequate availability across the country during the upcoming festival months, with higher household demand as well as increased requirements from the sweets, snacks, food-service and HORECA segments," Sudhakar Desai, President, Indian Vegetable Oil Producers’ Association (IVPA) said.

According to him, the revised duty structure is also significant from point of view of demand shifts as sunflower oil duty cut has been steeper making sunflower oil more affordable especially in the major consuming region of South India.

“India remains dependent on imports to meet a substantial portion of its edible-oil requirement, making the domestic market sensitive to international edible-oil prices and global supply conditions. Greater flexibility to import sunflower oil and soyabean oil will shift away demand from palm oil which is expected to be relatively expensive due to implementation B50 bio fuel mandates and cut down of the acreage expansion," Desai said.

IVPA had been demanding an import quota on zero duty imports from SAFTA countries as the industry especially in north and north east India has been reeling under the pressure of zero duty imports from Nepal due to duty arbitrage with Indian duties. Even after the current reduction in duties, Nepal goods will still be more competitive compared to domestically refined oils.
Desai said that at the consumer level, 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.

“As industry, we remain focused on ensuring adequate availability, efficient distribution and stable supplies during the festive season. A combination of timely imports, healthy inventories and supportive policy measures should help the market respond to seasonal demand while keeping affordability in focus at the same time supporting oilseed farmers -  a truly a trapeze act for the government and industry," he added.