Edible oils to be cheaper as Centre cuts basic customs duty on crudes

New Delhi: The Central government has reduced the Basic Customs Duty (BCD) on crude edible oils — crude sunflower, soybean, and palm oils — from 20 per cent to 10 per cent, and ordered edible oil industry associations to immediately pass on the reductions to consumers. 

The Food and Consumer Affairs Ministry said the reduced BCD would result in the import duty differential between crude and refined edible oils increasing from 8.75 per cent to 19.25 per cent. 

This adjustment was aimed at addressing escalating edible oil prices resulting from the September 2024 duty hike and concurrent increases in international market prices, a statement said. 

The duty differential was meant to help encourage domestic refining capacity utilisation and reduce imports of refined oils, officials said.

Import duty on edible oils is one of the important factors that impact the landed cost of edible oils, and thus domestic prices.

By lowering the import duty on crude oils, the government aims to reduce the landed cost and retail prices.

A meeting with leading edible oil industry associations and industry stakeholders, which the Department of Food and Public Distribution secretary chaired, saw an advisory issued directing them to pass on the benefits from the duty reduction to consumers.

Industry stakeholders are expected to adjust their Price to Distributors (PTD) and Maximum Retail Price (MRP) in accordance with the lower landed costs immediately, said the department in a statement.

Associations have been requested to advise their members to implement immediate price reductions and share updated brand-wise MRP sheets with the department every week.

The ministry shared a format with the edible oil industry for reporting the reduced MRP and PTD data, emphasising that "timely transmission of benefits through the supply chain is imperative to ensure consumers experience corresponding decreases in retail prices".

The decision came after a detailed review of the sharp rise in edible oil prices following last year's duty hike. The increase led to significant inflationary pressure on consumers, with soaring retail edible oil prices contributing to rising food inflation.