Why did India increase import duties on crude and refined edible oils?

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India Increased Import Duties on Edible Oils to Support Local Oilseed Farmers

India has significantly increased import duties on crude and refined edible oils, including palm oil, soybean oil, and sunflower oil, effective September 14. This move aims to bolster prices for domestic oilseed farmers who have been facing declining wholesale prices for their produce. The federal government also recently approved soybean procurement at the minimum support price of 4,892 rupees per quintal, reflecting pressure from farmers in key soybean-producing states.
Hike in Basic Customs Duty and Effective Rates

The basic customs duty on crude palm oil, soybean oil, and sunflower oil has been raised from zero to 20 per cent. For refined versions of these oils, the duty has climbed from 12.5 per cent to 32.5 per cent. When combined with existing duties like the agriculture infrastructure and development cess and social welfare surcharge, the effective import duty on crude oils has escalated from 5.5 per cent to 27.5 per cent. Similarly, the effective rate for refined oils has jumped from 13.75 per cent to 35.75 per cent.
Support for Domestic Oilseed Farmers

The increase in import duties was advocated by an Indian trade group seeking to ensure a "remunerative price" for local oilseed farmers. This measure is expected to provide a competitive advantage to domestically produced oilseeds by making imported oils more expensive. Wholesale prices for soybean, for instance, had dropped to between 3,200 and 3,700 rupees in August, highlighting the financial strain on farmers.
India's Position in Edible Oil Market

India stands as the world's largest importer and second-largest consumer of edible oils. In the fiscal year 2022-23, the country imported 16.5 million tonnes of edible oils, with domestic production meeting only about 40-45 per cent of its total needs. Total consumption of oils and fats in 2023 was approximately 27.2 million tonnes, with palm oil constituting a significant 36 per cent share.
Impact on Palm Oil Trade with Malaysia

Palm oil is a crucial component of India's edible oil imports. In 2023, India imported 2.83 million tonnes of palm oil from Malaysia, which represented 18 per cent of Malaysia's total palm oil exports. In August alone, India's palm oil imports from Malaysia reached 321,952 tonnes. Palm oil accounted for a substantial 52 per cent of India's total vegetable oil imports, amounting to 1.53 million tonnes, during that month. Other significant suppliers of palm oil to India include Indonesia and Thailand, while soyoil and sunflower oil are primarily sourced from Argentina, Brazil, Russia, and Ukraine.

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Why did India increase import duties on crude and refined edible oils?

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