Govt Slashes Customs Duty On Soya Bean Oil And Sunflower Oil Imports To 12.5 Per Cent From 17.5 Per Cent

The Department of Revenue issued a notification on June 14, stating that the Customs duty on imports of soya-bean oil and sunflower oil will be lowered to 12.5 per cent

The government has announced a cut in import duty on refined soya bean oil and refined sunflower oil, lowering it from 17.5 per cent to 12.5 per cent. The Department of Revenue under the Ministry of Finance issued a notification on June 14, stating that the Customs duty on imports of soya bean oil and sunflower oil will be lowered. The revised Customs duty rates will come into effect from June 15, 2023. This move is expected to have a positive impact on the affordability of these essential cooking oils for consumers across India. 

According to a Mint report, as a result of this revision, all crude oils, including crude palm oil, sunflower oil, and soya oil, will be subject to a 5 per cent import duty, resulting in a total tax incidence of 5.5 per cent. In the case of refined edible oil, the effective import duty will be 13.75 per cent. However, for refined oil, the import duty will be 12.5 per cent, along with an additional 10 per cent cess on the import duty. These adjustments reflect the updated tax structure for different categories of edible oils in India.

"Even with lesser duty difference between crude and refined soya and sun oils, chances of shipment of refined soy bean oil or sunflower oil is not commercially viable but may have some temporary sentimental impact on market," Executive Director of the Solvent Extractors’ Association of India (SEA) B V Mehta told Mint.

India, as the largest global purchaser of vegetable oils, heavily relies on imports to meet approximately 60 per cent of its annual consumption of 24 million tonnes (MT), as per the Mint report. Out of the total 14 MT of edible oil imports made by India each year, crude oil accounts for 75 per cent of the share, while refined oil constitutes the remaining 25 per cent, the report said citing data from SEA. 

According to the report, from November to April, there was a significant increase in imports of palm products in India due to favorable price parity, reaching 4.9 million tonnes (MT) compared to 3.2 MT during the same period last year. The share of palm oil in total imports rose from 49 per cent to 61 per cent, while the import of soft oils decreased. However, in the past two months, there has been a notable surge in shipments of sunflower and soybean oils, totaling 3.1 MT in the first half of the current oil year (November-October), compared to 3.3 MT last year. As a result, the share of soft oils decreased from 51 per cent to 39 per cent, according to data from the Solvent Extractors' Association of India (SEA).

The report further said that as of June 2, the landed price of crude palm oil (CPO) at Mumbai port stands at $860 per tonne, compared to $1,557 during the same period last year. Crude soy oil is priced at $970 per tonne, down from $1,686, while sunflower oil is quoted at $860 per tonne, a decrease from $1,941 per tonne last year. In contrast, the prices of refined soy oil are currently at Rs 90,000 per tonne, and sunflower oil is priced at Rs 92,000 per tonne. In comparison, during the corresponding period last year, refined soy oil was priced at Rs 1.4 lakh per tonne, and sunflower oil was at Rs 1.7 lakh per tonne, as per the Solvent Extractors' Association of India (SEA) data

In an effort to support the edible oil industry, the government reduced import duties on crude palm, soybean, and sunflower oils in September, last year. This concessionary duty structure was further extended until 31 March of the following year, as announced in December. These measures aim to enhance the affordability and availability of edible oils in the country.