Duty reduction on crude edible oils beneficial for both refiners, consumers: CareEdge
New Delhi [India], June 22 (ANI): The recent cut in import duties on crude edible oils is beneficial for major industry players as it would encourage refiners to favour crude imports over refined oils, a report by CareEdge Ratings said.
Also, according to the rating agency, the duty reduction would lead to improved capacity utilisation and enhanced refining margins through increased domestic processing.
On May 30 this year, the government announced a reduction in the Basic Customs Duty (BCD) on key imported crude edible oils -- Crude Palm Oil (CPO), Crude Soybean Oil, and Crude Sunflower Oil -- lowering it from 20 per cent to 10 per cent.
The move is widely seen as an effort to taper domestic edible oil prices and control food inflation.
Post the duty cut, the Basic Customs Duty on Refined Edible Oils (RBD) remains at 32.5 per cent, widening the differential between Refined, Bleached, and Deodorized palm oil and crude variant of palm oil to 19.25 per cent and enhancing the competitive advantage for domestic refiners.
Ultimately, it will aid better price discovery for retail consumers.
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.
'The increase in duty differential between crude and refined edible oils shall enhance competitiveness for domestic refiners,' the CareEdge report read.
Domestic retail edible oil prices, 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 resulting from the duty reduction, the rating agency said.
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 (CPI-based) easing to 2.8 per cent in May 2025 (as per data from the Ministry of Statistics and Programme Implementation) 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 recent duty revision acts as a timely and prudent policy intervention aimed at moderating inflationary pressures while bolstering the competitiveness of domestic refiners. The increased duty differential is expected to enhance gross refining margins and boost capacity utilisation in the near term. Additionally, the reduced landed costs will likely result in a price correction over the near term, ultimately benefiting retail consumers,' said Rajan Sukhija, Associate Director, CareEdge Ratings.
Priti Agarwal, Senior Director, CareEdge Ratings, said, 'The move is a win-win for all in the domestic edible oil manufacturing value chain as it will not just strengthen the capacity utilisation of domestic refiners but also ensure a fair price to domestic oilseed farmers and a fair price to consumers.' (ANI)
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