Domestic soybean prices in India currently hover around Rs 4,600 ($54.84) per 100 kg, which is below the government-mandated support price of Rs 4,892.
In a significant policy shift aimed at supporting local farmers facing declining oilseed prices, the Indian government has increased the basic import duty on both crude and refined edible oils by 20 percentage points. This decision was announced on Friday and marks an effort to bolster domestic production as India remains the largest importer of edible oils globally.
This adjustment in import duties is expected to elevate domestic edible oil prices while potentially curbing demand for imported varieties such as palm oil, soyoil, and sunflower oil. Following this announcement, futures for soyoil on the Chicago Board of Trade experienced a decline exceeding 2 percent.
Effective from September 14, New Delhi has instituted a basic customs duty of 20 percent on crude palm oil, crude soyoil, and crude sunflower oil. Consequently, this raises the total import tax on these three types of oils from an existing rate of 5.5 percent to a new rate of approximately 27.5 percent due to additional levies including India’s Agriculture Infrastructure Development Cess and Social Welfare Surcharge.
Refined versions of these oils will now incur an import duty set at 35.75 percent compared to the previous rate of just 13.75 percent.
Reports from Reuters in late August indicated that this increase in vegetable oil import taxes was under consideration as part of efforts to assist soybean farmers ahead of upcoming regional elections in Maharashtra later this year.
Sandeep Bajoria, CEO at Sunvin Group—a brokerage specializing in vegetable oils—commented that “for the first time in quite a while,” there seems to be an attempt by the government to strike a balance between consumer needs and farmer welfare. He noted that this move enhances prospects for farmers receiving minimum support prices for their soybean and rapeseed crops.
With over 70% of its vegetable oil requirements met through imports—primarily sourced from countries like Indonesia, Malaysia, Thailand (for palm oil), Argentina, Brazil, Russia, and Ukraine (for soyoil and sunflower)—India’s dependency highlights how crucial these changes are for local agricultural markets.
A dealer based in New Delhi associated with global trade remarked that since more than half (over 50%) of India’s edible oil imports consist solely of palm oil; it is evident that raising duties will likely exert downward pressure on palm oil prices moving into next week’s trading sessions.
