**Summary:**
In response to Lok Sabha Unstarred Question No. 3483, addressed on August 11, 2025, the Ministry of Finance, Department of Revenue, addressed concerns regarding the reduction in customs duty on crude edible oils. The government reduced the Basic Custom Duty (BCD) on crude edible oils from 20% to 10%, effective June 1, 2025. This reduction was implemented to balance domestic refining enhancement, consumer price reduction, and fair compensation for farmers.
The Ministry considered and rejected utilizing a dynamic import duty mechanism for Crude Palm Oil (CPO) due to India's heavy reliance on edible oil imports (approximately 60%) and the extreme volatility of global prices, which would likely render a dynamic system ineffective in stabilizing domestic prices.
The Ministry anticipates that the BCD reduction on crude edible oils, including sunflower, soybean, and palm oils, will alleviate inflationary pressures on edible oil prices and promote higher utilization of domestic refineries and the local edible oil refining industry. The overarching objective is to support the domestic refining industry while ensuring reasonable consumer prices.
Key Entities Referenced
MINISTRY OF FINANCE: A department of the Government of India responsible for financial matters.
LOK SABHA: The lower house of the Parliament of India.
SHRI PUTTA MAHESH KUMAR: Member of LOK SABHA who raised the question about reduction in custom duty on crude edible oil
Crude Edible Oil: The subject of the parliamentary question, referring to unrefined oils used for consumption.
SHRI PANKAJ CHAUDHARY: MINISTER OF STATE IN THE MINISTRY OF FINANCE who answered the parliamentary question
Basic Custom Duty BCD: A tax imposed on goods when they are transported across international borders.
Crude Palm Oil CPO: Unrefined palm oil, a specific type of crude edible oil.
India: Country where edible oil needs are addressed in the policy.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 3483
TO BE ANSWERED ON MONDAY, AUGUST 11, 2025/ SRAVANA 20,
1947(SAKA)
REDUCTION IN CUSTOM DUTY ON CRUDE EDIBLE OIL
3483. SHRI PUTTA MAHESH KUMAR:
Will the Minister of FINANCE be pleased to state:
(a) whether the Government has undertaken any study/survey regarding
the impact of reduction in customs duty on crude edible oils on Indian oil
palm farmers;
(b) whether the Government has considered utilising a dynamic import
duty mechanism to maintain Crude Palm Oil (CPO) prices, if so, the
details thereof and if not, the reasons therefor;
(c) whether the Government has considered potential impact of
reduction in import duty on crude palm oil could have on the domestic
manufacture of palm oil; and
(d) if so, the details thereof and if not, the reasons therefor?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) Basic Custom Duty (BCD) was reduced from 20% to 10% on crude
edible oils with effect from 1st June, 2025. The objective behind the
reduction of customs duty on crude edible oils is not to undermine
domestic cultivation but rather to create a balanced environment where
domestic refining is enhanced, consumer prices are reduced and farmers
continue to receive fair compensation for their produce.
(b) A dynamic import duty structure on edible oils in India has certain
disadvantages. Since India relies on imports for about 60% of its edible oil
needs, domestic prices are heavily influenced by international market
rates. Due to the extreme volatility of global prices, using a dynamic
import duty system is unlikely to effectively stabilize or control prices
within the domestic market.
(c) & (d) The recent reduction of Basic Customs Duty (BCD) on crude
edible oils, including crude sunflower, soybean and palm oils,
besides alleviating the inflationary pressures on edible oil prices, is
aimed at higher utilisation of domestic refineries and promoting
local edible oil refining industry.
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