Industry group urges edible oil makers to pass on duty cuts to consumers

The communication comes after the government’s 31 May decision to cut the basic customs duty on crude soybean, palm and sunflower oil from 20% to 10%. This change reverses over eight months of higher import duties on these oils. 

Consequently, the effective import duty on these three products, which includes basic customs duty and additional fees, has decreased to 16.5% from 27.5%.

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“It is pertinent to note that the Government of India has downward revised the import duty on crude oils, with the expectation from the industry that the accrued benefit would be shared/passed on to the consumer. Members are requested to pass-on the reduction in cost to the consumers and reduce their marked M.R.P. on the package,” according to a letter circulated by B. V. Mehta, executive director, SEA to its members, a copy of which has been reviewed by Mint.

SEA is an industry body representing the solvent extraction and vegetable oil industries. With 875 members, SEA encompasses approximately 350 operational solvent extraction plants with a combined annual oilcake-oilseed processing capacity of about 30 million tonnes.

Meanwhile, the basic customs duty on refined oils remains unchanged at 32.5%. Industry bodies believe this decision will help safeguard domestic refiners.

The government increased the import duty difference between crude and refined oils by reducing the duty on crude oils. This significant reduction in the duty on crude edible oils will vitalize the vegetable oil refining industry by enabling increase capacity utilization, SEA said in an advisory. 

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This policy shift is a “perfect strategic shot” by the government for lower food inflation, affordable prices for consumers, a robust framework for ‘Make in India’ promoting domestic manufacturing and a resilient and self-reliant edible oil ecosystem, according to the SEA letter.

SEA’s communication follows a letter to its president from the department of consumer affairs, food and public distribution. In this letter, dated 2 June, the department requested SEA to direct its members to implement immediate and transparent price cuts.

This measure aims to benefit consumers and strengthen the domestic refining sector, with a further request for weekly submission of updated brand-wise MRP sheets to the department.

Edible oil manufacturers said they are closely monitoring input costs and inventory cycles.

“The recent reduction in import duties is a welcome move and will provide relief to consumers. At AWL Agri Business Ltd. we are closely monitoring input costs and inventory cycles. Once the higher-duty stocks are consumed, we will suitably reduce prices in line with the new duty structure. As always, we remain committed to passing on any sustained benefits in costs to our consumers,” said Angshu Mallick, chief executive officer and managing director, AWL Agri Business Ltd, which sells edible oils under the Fortune brand.

“The edible oil market remains stable, supported by a strong domestic supply scenario,” he said. The current mustard crop has been robust, with seed production estimated between 10–12 million tonnes and high oil content, contributing to overall supply comfort, he added. 

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“These factors are expected to support bulk demand and B2B agri-sales in the near term. In this stable environment, we have not made major changes to our sourcing or inventory strategies. However, we have enhanced our direct distribution reach by 19%, ensuring availability of essential commodities across markets,” Mallick said.