The Indian government has raised import duties on edible oils to support domestic farmers, effective from September 14, 2024. A notification issued by the finance ministry on September 13 has increased the basic customs duty on crude soybean, sunflower, and palm oils from zero to 20 percent. Additionally, the duty on refined oils has been hiked from 12.5 percent to 32.5 percent.
This move comes after a significant surge in the import of oils in the first six months of the year. Palm oil imports alone increased by 30 percent, while sunflower seed, safflower, and cottonseed oil imports rose by 55 percent. The price drop in global markets contributed to this spike in imports, adversely affecting domestic farmers as local prices fell.
The new effective duties are now 27.5 percent for crude oils and 35.75 percent for refined oils, compared to 5.5 percent and 13.75 percent under the previous structure. India is heavily reliant on imports to meet over 70 percent of its oilseed demand, and the previous lower duty rates were intended to protect consumers amid rising global prices. The latest changes aim to restore balance and provide relief to local farmers struggling with reduced prices.
In the agricultural sector, oilseed sowing has increased, with the total acreage rising by 1.2 percent to 19.2 million hectares as of September 12, 2024. Meanwhile, the government has also lifted the minimum export price limit on onions, which is expected to enhance exports, particularly benefiting farmers in Maharashtra, where elections are expected later this year.
These changes reflect the government’s efforts to balance consumer interests with the need to support domestic agriculture, particularly as India continues to be a major importer of edible oils. The decision to raise duties could help stabilize local prices and offer much-needed support to farmers, who have been facing increased competition from cheaper imports.
This adjustment in duties could also be seen as part of broader efforts to encourage self-sufficiency in agricultural production, reducing dependency on global markets. However, the impact on consumer prices will be closely monitored, as higher import duties may lead to an increase in the cost of cooking oils for consumers.
Key Takeaways:
Increased Duties: 20% duty on crude oils, 32.5% on refined oils.
Import Surge: 30% rise in palm oil imports and 55% in other oils in the first half of 2024.
Agricultural Impact: The move is aimed at supporting domestic farmers affected by price drops.
Onion Export: Minimum export price limit on onions lifted to benefit farmers, especially in Maharashtra.
This policy shift highlights the government’s focus on strengthening the domestic agriculture sector while managing import dependencies.
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