India weighs cutting edible oil import duty by about 5 points ahead of festival season

Duty cut under discussion, no decision yet

India is considering lowering import duties on vegetable oils to contain retail prices before the festival season, according to reports by Jagran, ABP Live and Live Hindustan citing government officials. Domestic edible oil prices have risen by about 20% over the past year. No official decision has been announced.

The measure under discussion is a reduction of roughly 5 percentage points in the basic import duty on edible oils, Jagran and ABP Live reported. Officials cited by Live Hindustan said a cut of that size would lower the landed cost of imported oil while keeping domestic soybean prices above the government's support level, limiting the damage to oilseed growers.

Festival demand meets rising inflation

Edible oil consumption in India peaks between September and November, when Ganesh Chaturthi, Navratri and Diwali drive household and commercial frying, sweets and savoury snack production. Jagran notes the demand period extends into December, as the wedding season begins in November. Live Hindustan reported that industry participants expect prices to stay under upward pressure through the festival and wedding season, with little chance of an immediate decline before the new crop arrives in November.

The measure is being weighed as consumer inflation turns higher. Consumer price index-based retail inflation rose to 4.80% in August from 4.45% in July, according to Live Hindustan, which attributed costlier domestic oil to high international prices, rising freight costs and a weaker rupee.

Import dependence and supplier base

India is the world's largest importer of vegetable oil, Live Hindustan reported. Estimates of import dependence differ across the reports: Live Hindustan puts it at about 60% of consumption, while Jagran and ABP Live put it at about 66%, or two-thirds.

• Palm oil: sourced mainly from Indonesia and Malaysia
• Soybean oil: sourced from Argentina and Brazil, according to Jagran
• Sunflower oil: sourced from Russia, with ABP Live also naming Ukraine
• Additional volumes: Jagran lists Nepal and Thailand as supplementary suppliers

Because of that dependence, movements on international markets pass directly into Indian domestic prices, Live Hindustan reported. Jagran said the government is running a self-reliance programme in the sector to reduce dependence on foreign supply.

Monthly import volumes

Monthly edible oil imports into India typically range between 948,000 tonnes and 1.6 million tonnes, according to Live Hindustan. Recent movement:

• July imports reached 1.48 million tonnes, up from 1.1 million tonnes in June, an increase of about 35% in one month
• Palm oil imports rose 48% month on month and soybean oil imports rose 31%
• Year on year, July volumes were 8.3% lower than the 1.61 million tonnes imported in July 2025

Precedent and the limits of tariff relief

This would not be the first cut of the cycle. In May 2025 the government reduced the basic customs duty on crude edible oils to 10% from 20%, covering crude palm oil, crude soybean oil and crude sunflower oil, ABP Live reported.

ABP Live also cautioned that lower duties do not automatically translate into lower shelf prices. A tariff cut can raise Indian import demand, which in turn can push palm and soybean oil quotations higher on international markets, eroding part of the relief the government intends to deliver. ABP Live additionally linked pressure on global prices to supply disruption connected to the Russia-Ukraine war and to poor weather.

The trade-off flagged in all three reports is domestic. Cheaper imported oil pressures prices for local soybean and other oilseeds and cuts returns for farmers. That constraint is shaping the size of any cut, with officials balancing consumer relief against the support level set for domestic soybean.