Edible Oil Import Duty Cut Before Festivals: Cheaper Cooking Oil vs Oilseed Farmers
The Centre cut the Basic Customs Duty (BCD, the main tax charged on goods coming into India) on edible oils with effect from 24 September 2026.
The duty on crude sunflower oil was cut from 10% to nil. Crude soybean oil and crude palm oil were cut from 10% to 5%.
The duty on refined oils was also cut: refined soybean and palm oil from 32.5% to 27.5%, and refined sunflower oil from 32.5% to 22.5%.
After adding the Agriculture Infrastructure and Development Cess (AIDC) and the social welfare surcharge, the total (effective) duty on crude palm and soybean oil falls from about 16.5% to about 11%, and on crude sunflower oil to about 5.5%.
The gap between the duty on crude oil and refined oil was kept close to what it was before. This protects Indian refineries, which import crude oil and refine it here, from being undercut by cheaper imported refined oil.
The government's stated aim is to bring down retail cooking oil prices ahead of the festival season (September to November), when household demand for cooking oil rises sharply. Oilseed farmer groups have objected, saying cheaper imports will pull down the price they get for soybean and other oilseeds just as the new kharif harvest reaches mandis (wholesale farm markets).
Customs Duty in India: Basic Customs Duty, Cess and the Effective Rate
Customs duty is a tax the government charges on goods moving across India's borders, mostly on imports (goods coming in) but sometimes on exports (goods going out) too. It is collected at ports, airports and land check-posts by the Customs department, which works under the Central Board of Indirect Taxes and Customs (CBIC). When you read that "the government cut the import duty on edible oil", it means this tax was reduced.
This cut is a direct, real example of the government using BCD, AIDC and the surcharge together to bring down the effective duty on both crude and refined edible oil, while trying to preserve the protective gap for Indian refiners, right before the festival demand season.
National Mission on Edible Oils – Oilseeds (NMEO-Oilseeds)
The National Mission on Edible Oils – Oilseeds (NMEO-Oilseeds) is a central government scheme meant to help India grow more of its own edible oil, so it does not have to depend so heavily on imports. It gives farmers better seeds, more irrigation support and better prices, so that they grow more oilseed crops like soybean, mustard, groundnut and sunflower.
The import duty cut works in the opposite direction from NMEO-Oilseeds' long-term goal, because it makes imported oil cheaper just as Indian farmers, supported by the mission, are trying to sell their own oilseed harvest, which is the central tension in the sector's policy right now.
Minimum Support Price (MSP) Mechanism
The Minimum Support Price, or MSP, is a price the government promises to pay farmers for certain crops, no matter how low the market price falls. It acts like a safety net: if the market price of a crop drops below the MSP, the government (through its agencies) can buy the crop from farmers at the MSP instead, so farmers do not have to sell at a loss.
Farmer groups' objection to the edible oil duty cut is precisely about this gap: the announced MSP for soybean gives them only limited real protection if the market price falls because of cheaper imports, since government procurement of oilseeds at MSP is far smaller in scale than for wheat and rice.
- BCD on crude sunflower oil: 10% to nil (from 24 September 2026); crude soybean/palm oil: 10% to 5%
- BCD on refined soybean/palm oil: 32.5% to 27.5%; refined sunflower oil: 32.5% to 22.5%
- Effective duty (with AIDC and surcharge) on crude palm/soybean oil: about 16.5% to about 11%; on crude sunflower oil: to about 5.5%
- India imports more than half its edible oil requirement annually
- National Mission on Edible Oils (NMEO-Oilseeds and NMEO-Oil Palm) approved by the Union Cabinet in 2021
- MSP recommended by CACP, approved by CCEA, announced for Kharif and Rabi seasons twice a year