In a strategic move to curb rising prices, the Indian government has announced a reduction in import duty on edible oils. With the aim of providing relief to consumers and supporting the Fast-Moving Consumer Goods (FMCG) sector, the import duty has been slashed from 20 percent to 10 percent. This decision is expected to bring down the prices of key cooking oils such as soybean, palm, and sunflower, offering both economic and market-wide benefits.

Price surge and policy response

Over the past year, prices of edible oils, including palm oil, have witnessed a sharp increase. This upward trend was largely driven by a higher import duty imposed by the government in September last year. The aim was to protect domestic producers and promote regional farming.

For the first time, a basic customs duty of 20 percent was introduced, which, when combined with other levies, raised the effective import duty on crude oils to as much as 27.5 percent.

In addition, the basic duty on refined edible oils such as palm, sunflower, and soybean was increased from 12.5 percent to 32.5 percent. This led to a significant spike in retail prices, affecting households and industries alike.

Changing global landscape

India depends heavily on edible oil imports, fulfilling nearly 57 percent of its total requirement from international markets. However, global dynamics have shifted. An increase in global oilseed production has triggered a decline in international prices, resulting in a surge in oil imports to India.

Consequently, domestic prices began to fall sharply. To counter this trend and shield domestic producers, the government initially increased the import duty.

The National Mission on Edible Oils-Oil Palm (NMEO-OP), launched in October........

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