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The Indian government has reduced the effective import duty on crude edible oils like palm, soybean, rapeseed, and sunflower from 27.5% to 16.5%, effective May 31. This decision increases the duty differential between crude and refined oils to 19.25%, benefiting domestic refiners and reducing dependency on imported refined oil. The move is expected to curb imports of refined palm oil, revitalizing India’s refining sector. Additionally, the duty-free import of yellow peas has been extended until March 31, 2026. Stakeholders, including IVPA and SEA, have welcomed the change, stating it promotes value addition, supports growers, and may stabilize edible oil prices without significantly altering overall import volumes.

Key Highlights

* India cuts crude edible oil import duty to 16.5%.

* Duty-free import of yellow peas extended to March 2026.

* Duty gap widened to 19.25% to aid domestic refiners.

* Move expected to reduce refined oil imports significantly.

* Industry anticipates stable prices and boosted local processing.

India has announced a significant reduction in the effective import duty on crude edible oils—from 27.5% to 16.5%—starting May 31. This includes a 10% basic customs duty, 5% agri cess, and 10% social welfare cess. The move aims to improve the competitiveness of domestic refiners by increasing the duty differential between crude and refined edible oils from 8.25% to 19.25%.

Industry stakeholders welcomed the move, saying it will curb the import of refined palm oil and shift demand back to crude palm oil (CPO). “We were asking for a 20% differential, and 19.25% is close enough. It supports our processors and growers,” said Sudhakar Desai, President of the Indian Vegetable Oils Producer Association (IVPA).

The Solvent Extractors’ Association of India (SEA) echoed the sentiment, noting that this policy shift creates a level playing field for domestic refiners, encouraging value addition and supporting jobs within India. SEA President Sanjeev Asthana added that the move will discourage refined palmolien imports, revitalizing India's port-based refining infrastructure.

In addition to the duty cut, the government extended the duty-free import of yellow peas until March 31, 2026. This extension ensures availability and price stability in the pulses segment.

The change also limits the advantage previously enjoyed by neighboring countries like Nepal under the South Asian Free Trade Agreement, reducing palm oil flows into India that bypassed higher tariffs.

Finally

The duty revision supports domestic refiners, curbs refined imports, and boosts value addition—marking a strategic step toward self-reliance in India’s edible oil sector.

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