Edible oil prices to come down as refiners pass on gains of customs duty cut

IANS June 17, 2025 378 views

Edible oil prices are expected to soften as refiners pass on savings from the recent customs duty cut. The government has mandated MRP reductions while boosting domestic refining margins through wider duty differentials. Stronger monsoon forecasts and easing food inflation further support the price decline. India, the world's top edible oil importer, sources over half its supply from Indonesia and Malaysia.

"The revised duty structure will enhance competitiveness for domestic refiners and improve refining margins." – CareEdge Report
Edible oil prices to come down as refiners pass on gains of customs duty cut
New Delhi, June 17: Domestic retail prices of edible oil, which saw firm trends during the first half of 2025 due to elevated global prices and currency depreciation, are expected to soften over the coming weeks as refiners pass on cost advantages to consumers.

Key Points

1

Government slashes customs duty on crude palm oil to 10%

2

Monsoon boost and lower food inflation to aid price drop

3

Duty differential between crude and refined oils widens to 19.25%

4

India imports 55-60% of edible oil needs, mainly from Indonesia and Malaysia

This is a result of the customs duty reduction announced by the Government on May 30, according to a CareEdge report released on Tuesday.

The Ministry of Consumer Affairs has also issued directives requiring edible oil companies to revise their Maximum Retail Prices (MRPs) downward and submit weekly updates on Price-to-Distributor (PTD) rates.

With food inflation easing to 2.8 per cent in May and the Indian Meteorological Department forecasting a stronger-than-normal monsoon, these developments are anticipated to reinforce the downtrend in edible oil retail prices collectively, the report states.

The increase in duty differential between crude and refined edible oils will also enhance competitiveness for domestic refiners.

With basic customs duty on crude palm oil now reduced to 10 per cent and refined oil duties unchanged at 32.5 per cent, the effective duty differential between crude and refined oils has risen to 19.25 per cent from 8.25 per cent.

The revised duty structure is expected to benefit major players by encouraging refiners to favour crude imports over refined oils. This leads to improved capacity utilisation and enhanced refining margins through increased domestic processing.

India remains the world’s leading importer of edible oils, meeting approximately 55-60 per cent of its domestic consumption through overseas purchases primarily from Indonesia and Malaysia.

In Oil Year 2023–24, India’s edible oil imports totalled approximately 15.96 million tonnes (MT), with palm oil accounting for around 55 per cent of the total, followed by soybean and sunflower oils.

During the first seven months of oil year 2024–25 (November 2024 to May 2025), edible oil imports stood at around 1.07 MT.

According to Indian Vegetable Oil Producers’ Association (IVPA), import of refined palm oil surged from 0.458 MT during Q2FY25 (period between June-September 2024) to 0.824 MT (representing 30 per cent of total palm oil imports) in the period October 2024 to February 2025, mainly due to duty hike on crude palm oil in September 2024.

Besides, refined palm oil costs and freight prices are approximately $45-50 per tonnes lower than crude palm oil, encouraging refined imports over crude palm oil.

Besides, this trend is exacerbated by the export policies of supplier countries, which generally impose higher export duties on crude palm oil than refined palm oil.

According to data from the Solvent Extractors' Association (SEA) of India, palm oil imports rose by 84 per cent month-on-month in May 2025 to reach 0.59 MT — the highest monthly volume recorded since November 2024, as palm oil was trading at a discount as compared to soyabean oil and sunflower oil, which prompted refiners to boost purchases.

Reader Comments

R
Rajesh K.
Finally some relief for middle-class families! Cooking oil prices were pinching our pockets badly. Hope this duty cut benefit actually reaches consumers and isn't eaten up by middlemen. Govt should monitor implementation strictly. 🙏
P
Priya M.
Good move but why did it take so long? Prices were skyrocketing for months while our leaders kept saying "inflation is under control". At least now some action. Hope the monsoon prediction holds true - that will help farmers and prices both.
A
Amit S.
Smart policy change - encouraging crude imports over refined oils will boost our domestic refining industry and create jobs. We import too much as it is, at least this way some value addition happens in India. Make in India should apply to edible oils too!
S
Sunita R.
As a small kirana store owner, I see first-hand how oil price hikes affect my customers. Many started buying smaller packs or switching to cheaper brands. Hope the MRP reductions happen quickly - the directive to submit weekly updates is a good step.
V
Vikram J.
While this is welcome, we need long-term solutions. 55-60% import dependence is dangerous for food security. Remember how Indonesia suddenly banned palm oil exports? We must increase domestic oilseed production - give farmers better MSP and technology.
N
Neha P.
The timing is perfect with monsoon predictions looking good. Lower oil prices + good harvest = happy households! 🎉 But companies better not drag their feet in reducing prices - we'll be watching!
K
Karan D.
Interesting how global market dynamics

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Tags:
edible oil prices customs duty cut food inflation palm oil imports India monsoon