India edible-oil import policy Photo: placeholder pending image-fill pass

India edible-oil import policy

India is the world's largest importer of vegetable oils, with imports meeting 55-60 percent of domestic edible-oil consumption in most years since 2010. Total edible-oil demand is about 25-26 million tonnes per year against domestic production of about 11-12 million tonnes; the gap is bridged through imports of palm oil from Indonesia and Malaysia, soybean oil from Argentina and Brazil and sunflower oil from Ukraine, Russia and Argentina. Edible-oil imports are the country's third-largest import bill after crude petroleum and gold, costing roughly USD 18-20 billion in 2022-23 at peak prices.

Import basket composition

In a normal year palm oil (CPO + RBD palmolein) accounts for 55-60 percent of the import basket, soybean oil 20-25 percent and sunflower oil 15-20 percent, with rapeseed oil, cottonseed oil and others making up the residual. Indonesia is the single largest source of palm oil, followed by Malaysia. Argentina and Brazil dominate soybean-oil supply and Ukraine and Russia together supply almost all of India's sunflower oil. Most imports arrive at the Kandla, Mundra, JNPT, Kakinada and Krishnapatnam ports.

Duty structure

India operates a two-tier tariff structure: the Basic Customs Duty (BCD) plus the Agriculture Infrastructure and Development Cess (AIDC) and applicable cesses, levied on the tariff value notified fortnightly by CBIC. Crude oils attract lower duty than refined oils to encourage domestic refining; the typical CPO-versus-RBD palmolein duty differential is 7.5 percentage points, intended to protect the domestic refining margin. Duties are revised frequently in response to global price moves and domestic inflation: during the 2021-2023 price spike, the effective duty on crude palm, soya and sunflower oils was cut to as low as 5.5 percent (BCD nil + 5.0 percent AIDC + cesses) to cool retail prices; in September 2024 it was raised back to about 27.5 percent on crude and 35.75 percent on refined oils as global prices softened.

Quantitative measures and trade agreements

A small Tariff Rate Quota (TRQ) of 1.5 lakh tonnes per year for crude sunflower and soybean oils at concessional duty was opened during 2022-23 and 2023-24. Under the India-Indonesia Comprehensive Economic Partnership Agreement framework and ASEAN-India FTA, palm oil from Indonesia and Malaysia enters at lower negotiated duty rates than MFN. There is no quantitative restriction on edible-oil imports; the policy lever is duty plus the State Trading Enterprise (NAFED, HAFED, NCCF) role on the domestic side.

Policy objectives

The stated objectives are to (i) keep domestic edible-oil retail prices stable for consumers, (ii) maintain incentive prices for domestic oilseed farmers via MSP and procurement, and (iii) protect domestic refining and crushing capacity through duty differentials. These goals are inherently in tension — lower import duty helps consumers but depresses domestic mandi prices for mustard, soybean and groundnut farmers, while higher duty supports farmgate prices but raises retail inflation. Successive governments use the duty knob to balance the two.

Self-sufficiency strategy

The current self-sufficiency strategy combines area expansion and yield improvement through NMOOP / NMEO-Oilseeds (Oilseeds Nmoop Mission Overview), and the dedicated oil palm push under NMEO-OP (Oil Palm Mission Pmkasi National). The 2024-25 target is to reduce import dependence to about 40 percent by 2030 by raising domestic edible-oil production to 18-20 million tonnes.

Sources

Edible Oil. Department of Food and Public Distribution.
Customs duty notifications on edible oils. Central Board of Indirect Taxes and Customs.
Oilseeds and Edible Oils: Production and Trade. Press Information Bureau.