NITI Aayog Advocates for Higher Import Duties in India on Edible Oils to Boost Self-Sufficiency
Higher Import Duties Suggested to Strengthen Domestic Edible Oil Industry
NITI Aayog has released a strategic report proposing an increase in import duties on edible oils, raising the current rate from 5.5%. The report, titled “Pathways and Strategy for Accelerating Growth in Edible Oil towards Goal of Atmanirbhartar,” emphasizes the importance of public-private partnerships to accelerate domestic edible oil production. The Aayog suggests leveraging private sector expertise in technology, marketing, seed production, and area promotion across all oilseed crops, including oil palm, with buy-back arrangements.India's Dependency on Imported Edible Oils: A Growing Concern
India currently meets only 40-45% of its edible oil needs through domestic production, posing a significant hurdle to achieving self-sufficiency. To address this, the Agriculture Ministry has suggested raising import duties on edible oils to protect domestic farmers and ensure they receive at least the Minimum Support Price (MSP) for their oilseed crops. The Food Ministry also supports this initiative, especially with the upcoming Rabi sowing season, during which India's largest oilseed crop, mustard, will be planted. However, the final decision will be made by the Committee of Ministers, led by Cooperation Minister Amit Shah.Impact of Current Import Duty Structure
Currently, the import duty (including cess) on crude palm oil, soybean oil, and sunflower oil stands at 5.5%, while the duty on refined varieties of these oils is 13.75%. Industry officials point out that zero duty on crude edible oil is uncommon globally, and without an increase, farmers will lack the motivation to grow oilseeds. This has resulted in freshly harvested soybeans selling approximately $0,05 per kg in Madhya Pradesh and Maharashtra, respectively, well below the MSP of approximately $0,06 per kg.Flexible Tariff Structure Key to Balancing Market Dynamics
The NITI Aayog report advocates for a flexible tariff structure that responds to global market prices, domestic supply and demand, and the MSP for oilseeds. Implementing higher import duties could safeguard domestic production, while a significant duty gap between crude and refined oil would benefit processing industries. The report also emphasizes aligning support prices with the import duty structure to support farmers, processors, and consumers alike.Over the past few decades, per capita consumption of edible oil in India has surged to 19.7 kg/year, outpacing domestic production and leading to heavy reliance on imports. To address this, the report recommends developing customized cluster technologies to improve yield and establishing Agro-Ecological Sub Region (AESR)-based crop-specific model farms to spread advanced technologies horizontally.
NITI Aayog’s recommendations for increasing import duties on edible oils aim to boost domestic production and support India's farmers. By implementing a flexible tariff structure and aligning it with MSP, India can move closer to self-sufficiency in edible oils, reducing its heavy reliance on imports and strengthening its domestic agricultural sector.