India Weighs Raising Edible Oil Import Duties To Support Farmers

India is considering raising import duties on edible oils following a request from the domestic vegetable oil industry. However, no decision has been taken yet.

The government is examining whether higher tariffs would help local farmers secure better prices for their crops. The deliberations come as New Delhi steps up efforts to reduce foreign exchange outflows that have weighed on the rupee, Asia's worst-performing currency this year.

India imports roughly 60% of its edible oil requirements, making it the world's largest buyer of the commodity.

Earlier this month, Prime Minister Narendra Modi urged consumers to reduce dependence on major imported goods including vegetable oils, fertilisers, gold and crude oil, signalling a broader push toward import substitution across key commodity categories.

The possible duty increase on edible oils would follow a recent hike in gold tariffs, part of the same drive to ease pressure on the current account.

The Global Context

A United Nations measure of global food commodity costs climbed last month to its highest level in more than three years, pushed up by the Middle East conflict disrupting supply chains for vegetable oils, meat and cereals.

Palm oil, the most widely consumed edible oil globally, has surged around 12% since the war began. Top producers Indonesia and Malaysia have ramped up biofuel production to offset higher energy costs domestically, tightening export supply.

India's potential move to raise import duties could slow its purchases and put a lid on the recent price rally, given its scale as a buyer.

Also Read - India Hikes Petrol And Diesel Prices By 90 Paise; Second Fuel Price Hike This Week

What Changed Last Year

India moved in the opposite direction in 2024, cutting the basic import duty on crude palm oil, soybean oil and sunflower oil from 20% to 10% to bring domestic prices down and provide relief to processors. The government had also directed the industry to pass the duty reduction benefits through to consumers.

Reversing that cut now would mark a significant policy shift, prioritising farmer income and forex conservation over domestic consumer prices.

Sources:

NDTV

Business Standard