Government tells edible oil associations not to hike retail prices

The Indian government has told edible oil processors not to hike retail prices despite the recent increase in import duties. The government said there is enough stock of cooking oils shipped at a lower duty. The food ministry said the stocks imported at lower duties would easily last 45-50 days, and so the processors should refrain from increasing maximum retail prices (MRP).

Last week, the Center had increased the basic customs duty on various edible oils to support domestic oilseed prices.

The department of food and public distribution (DFPD) secretary chaired a meeting with the representatives from Solvent Extraction Association of India (SEAI), Indian Vegetable Oil Producers’ Association (IVPA) and Soyabean Oil Producers Association (SOPA) in Delhi on 17 September to discuss the pricing strategy. 

The edible oil associations have been advised to ensure that the MRP of each oil is maintained till the edible oil stocks imported at 0% and 12.5% basic customs duty (BCD) are available and take up the issue with their members immediately.

Earlier also, after the department’s meetings with leading edible oil associations, the MRP of edible oils such as sunflower oil, soyabean oil and mustard oil were reduced by the industry. The reduction in oil prices had come in the wake of the reduction of international prices and reduced import duty on edible oils making them cheaper. The industry has been advised from time to time to align the domestic prices with the international prices so as to reduce the burden on the consumers.

On 14 September, the government had implemented an increase in the basic customs duty on various edible oils to support domestic oilseed prices. Effective 14 September 2024, the basic customs duty on crude soybean oil, crude palm oil, and crude sunflower oil has been raised from 0% to 20%, making the effective duty on crude oils to 27.5%. Additionally, the basic customs duty on refined palm oil, refined sunflower oil, and refined soybean oil has been increased from 12.5% to 32.5% making the effective duty on refined oils as 35.75%.

These adjustments are part of the government’s ongoing efforts to bolster domestic oilseed farmers, especially with the new soybean and groundnut crops expected to arrive in markets from October 2024.

The decision follows comprehensive deliberations and is influenced by several factors: increased global production of soybean, oil palm, and other oilseeds; higher global ending stocks of edible oils compared to last year; and falling global prices due to surplus production, the government said. 

This situation has led to a surge in imports of inexpensive oils, exerting downward pressure on domestic prices. By raising the landed cost of imported edible oils, these measures aim to enhance domestic oilseed prices, support increased production, and ensure that farmers receive fair compensation for their produce.

The central government said it aware that there is close to 30 LMT stock of edible oils imported at lower duty, which is sufficient for 45 to 50 days domestic consumption.