India’s edible oil market is facing reduced demand. Increased import duty not a fix.

India’s edible oil market is facing reduced demand. Increased import duty not a fix.

India’s retail food inflation has been high , averaging 7 per cent annually . It has risen further for the first eight months of 2024, averaging 8 per cent. In response, the government introduced several interventions to shield consumers, many of which have been rolled back last month.

 These include freeing up white rice exports, halving of export duty on parboiled rice and onions and increasing import duties on edible oils. 

To support soybean farmers, the government also announced procurement of over 5 million metric tonnes (MMTs) of the upcoming kharif crop at in Karnataka, Maharashtra, Madhya Pradesh, and Telangana. That is about 40 per cent of the estimated crop.

While more policy announcements, especially on ethanol prices from crops like rice and sugarcane, are expected, this article focuses on the edible oil sector. 

On 2024, the government raised import duties on edible oils, arguing this would increase domestic demand for oilseeds like soybean, groundnut, and mustard. However, the relationship between import duties and oilseed prices has become less clear-cut due to factors such as the meal and biofuel markets.

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