In order to guarantee sufficient supply of molasses for regional ethanol manufacturers, the government on Tuesday declared a 50% export charge on the commodity. Additionally, the import duties on edible oils were prolonged by an additional year. The current import levy on refined and crude edible oils, such as sunflower, soy, and palm, has been extended for an additional year, until March 31, 2025. This extension was made well in advance to prevent inflationary pressures on the important commodity right before the nation’s general elections.
As per a notice from the finance ministry, the reduced tariffs on edible oils that were originally valid until March 31, 2024, will now last until March 2025. In June of last year, the government lowered the import duty on refined soybean and sunflower oils from 17.5% to 12.5% in an effort to ease consumer pressures. Crude palm, soybean, and sunflower oil have no duties; they only have a 5% agri-infra and a 10% education cess, for a 5.5% overall tax incidence.
In December, the Consumer Price Index’s segment for oils and fats saw an inflation of (-)14.96%, compared to (-)15.03% in November. India is hugely dependent on edible oil imports which meets 58% of the consumption demand of about 24-25 MT. In terms of share in domestic output, the share of oils includes mustard (40%), soybean (24%) and groundnut (7%) among others. Every year, the imports have increased.
According to the trade association, reduced import duties enabled India’s import of edible oils-palm, soybean, and sunflower to soar 17% year over year to a record 16.47 million tone (MT) in the 2022–2023 oil year (November–October). The amount of these cooking oils imported peaked in 2016–17 at 15.1 MT. Since February 2023, the retail inflation for the oil and fat category has been negative due to the significant import of edible oil, while global prices have decreased. Cooking oil saw a 14.96% year-over-year decrease in inflation in December 2023.
